This document defines mergers and amalgamations under Indian company law. It explains that a merger involves one company absorbing another, while amalgamation creates a new company from two or more existing companies. It outlines the process for calling meetings of creditors/members to approve schemes, requirements for notice and documents to be circulated. The effect and sanctions of approved schemes by the tribunal are described, including provisions for transfers of assets/shares and dissolution of companies. Penalties for non-compliance with the process are also mentioned. The section also discusses cross-border mergers between Indian and foreign companies.

1. Definitions
• Meaning of Merger
• Merger is an absorption of one or more
companies by a single existing company.
• There are two companies:-
• Acquiring company is a single existing
company that purchases the majority of
equity shares of one or more companies.
• Acquired companies are those companies
that surrender the majority of their equity
shares to an acquiring company.

3. • Meaning of Amalgamation:
• "Amalgamation is a union of two or more
companies, made with an intention to form a
new company.“
• In amalgamation also there are two companies:-
• Amalgamating companies are those two or more
companies which willingly unite (combine) to
carry on their business activities jointly.
• Amalgamated company is a newly formed union
(alliance) of two or more amalgamating
companies. It has a separate legal existence with
a new unique name.

5. MERGER AND AMALGAMATION
(SECTION 232):-
• The Tribunal, Merger, amalgamation or demerger
is proposed in the application of compromise and
arrangement under Section 230 (i) of the
company, or (ii) of the creditors, or (iii) of the
members of the company (iv) of the liquidator of
company under liquidation, may order the
meeting (A) Creditors or class of creditors, or (B)
of the members or class of members, (x) to be
called, (y) held and (z) conducted in the manner
directed by the Tribunal.

6. Notice of the Meeting:-
• The notice for a meeting called in pursuance of an order of
the Tribunal, shall be sent to all the creditors or class of
creditors and to all the members or class of members and
the debenture – holders of the company. The notice shall be
send individually at the registered address with the
company. The notice shall be accompanied by –
• (a) a statement disclosing the details of the compromise or
arrangement;
• (b) a copy of valuation report, if any;
• (c) explaining effect of the scheme on the creditors, key
managerial personnel, promoters and non – promoters
members and debenture – holders;
• (d) explaining effect of the scheme on any material interests
of the directors of the company or the debenture trustees;

7. • e) such other prescribed matters.
• In addition to the above, the companies merging
or demerging, shall also circulate –
• (f) the draft of the terms of scheme drawn up
and adopted by the directors of the merging
company;
• (g) confirmation that the copy of the draft
scheme has been filed with the Registrar;
• (h) a report adopted by the directors of the
merging companies effect of the scheme on each
class of share holders, key managerial personnel,
promoters and non – promoters shareholders
laying out in particular the share exchange ratio,
specifying any special valuation difficulties;
• (i) the report of the expert with regards to
valuation, if any;

8. • A notice along with all the documents shall also be sent to –
• (a) The Central Government;
• (b) The Income – tax authorities;
• (c) The Reserve Bank of India;
• (d) The Securities and Exchange Board of India;
• (e) The Registrar;
• (f) The stock exchanges;
• (g) The Official Liquidator;
• (h) The Competition Commission of India, is necessary; and
• (i) Such other sectorial regulators or authorities which are
likely to be affected by the compromise or arrangement.
• These authorities shall require to made representation within
a period of thirty days from the date of such notice. If these
authorities fail to represent within this period, it is presumed
that they have no representations to make on the proposals.

9. • (j) a supplementary accounting statement if the last
annual accounts of any of the merging company relate to
a financial year ending more than six months before the
first meeting of the company summoned for the
purposes of approving the scheme.
• The notice shall also be placed on the website of the
company. In case of a listed company, the notice shall
also be sent to the Securities and Exchange Boards of
India and stock exchanges for placing on their web – site.
The Notice shall also be published in newspapers.
• Any advertisement of or about the notice, shall indicate
the time within which compromise or arrangement shall
be made available to concerned person free of charge
from the registered office of the company.
• The notice shall provide that the person to whom the
notice is sent, may vote in the meeting either themselves
or through proxies or by postal ballot to the adoption of
the compromise or arrangement within one month from
the date of receipt of the notice.

10. Effect of the Scheme:-
• Where (i) majority of persons representing
three – fourth in value of the creditors or class
of creditors or members or class of members
agree to compromise or arrangement and (ii)
sanctioned by the Tribunal by an order; the
scheme shall be binding on the company; all
creditors or class of creditors or members or
class of members or in case of a company
being wound up, on the liquidator and the
contributories of the company.

11. The Order:-
• The Tribunal may, by order, sanction the compromise or
arrangement or may make provision for the following matters
–
• (a) The transfer to the transferee company of the whole or
any part of undertaking, property or liability of the transferor;
• (b) The allotment or appropriation by the transferee company
of any shares, debentures, policies or other like instruments in
the company;
• The company shall not hold any share in its own name or in
the name of any trust in its behalf or on behalf of any of its
subsidiary or associate companies and any such shall be
cancelled or extinguished;
• (c) The continuation by or against the transferee company of
any legal proceedings pending by or against any transferor

12. • company on date of transfer;
• (d) Dissolution, without winding – up, of any
transferor company;
• (e) The provision to be made for any person who
dissent from the compromise or arrangement;
• (f) Where share capital held by non – resident
shareholders under foreign direct investment
norms or guidelines, the allotment of shares of
the transferee company to such shareholders
shall be in manner specified in the order;
• (g) The transfer of the employees of the
transferor company to the transferee company to
transferee company;
• (h) Where the transferor is listed company and
the transferee company is unlisted company –

13. • The transferee company shall remain unlisted company until it become an
listed company;
• If shareholders of the transferor company decide to opt out of the
transferee company, provision for payment of the value of shares held by
them and other benefits in accordance with pre –determined price
formula or after valuation is made, and the arrangements may be made by
the Tribunal.
• The valuation shall not be less than the valuation in accordance with SEBI
regulations.
• (i) Where the transferor company is dissolved, the fee paid by the
transferor company on its authorised capital shall be set – off against any
fee payable by the transferee company on its authorised capital
subsequent to the amalgamation; and
• (j) Such incidental, consequential and supplemental matters as deemed
necessary.
• No compromise or arrangement shall be sanctioned by the Tribunal unless
a certificate by the company’s auditor has been filed with the Tribunal that
the accounting treatment proposed in the scheme compromise or
arrangement is in conformity with the accounting standards.

14. Filing with the Registrar:-
Every company in relation to which the order is
made shall cause a certified copy of the order to be
file with the Registrar from registration within thirty
days of the receipt of certified order.
Effective Date:-
The scheme shall clearly indicate an appointed date
from which it shall be effective and shall be deemed
to be effective from such date.

15. • Annual Statement on Scheme:-
• Every company, in relation to which the order
is made, shall file a statement with the
Registrar every year duly certified by a
chartered accountant or a cost accountant or
a company secretary in practice indicating
whether the scheme is being complied with.
The statement shall be filed annually until the
completion of the scheme.

16. Penalty:-
• If a transferor company or a transferee company
contravenes the provisions of this section, the
transferor company or the transferee company,
as the case may be, shall be punishable with fine
which shall not be less than one lakh rupees but
which may extend to twenty-five lakh rupees
and every officer of such transferor or transferee
company who is in default, shall be punishable
with imprisonment for a term which may extend
to one year or with fine which shall not be less
than one lakh rupees but which may extend to
three lakh rupees, or with both.

17. MERGER OR AMALGAMATION OF A COMPANY
WITH FOREIGN COMPANY (SECTION 234):-
• The provision of this chapter shall also apply to the scheme of
mergers and amalgamations between companies registered under
the Companies Act, 2013 and companies incorporated in the
jurisdictions of such countries as may be notified.
• This notification is a precondition of cross country merger and
amalgamation.
• The Central Government may make rules in connection with
mergers and amalgamations.
• With prior approval of the Reserve Bank of India, a foreign
company may merge into an Indian company or an Indian
company may merge into a foreign company.
• The terms and conditions may provide for payment of
consideration to the shareholders of the merging company in cash
or in Depository, or both.
• A foreign company means a company or body corporate outside
Indian nehether having a place of business in India or not.