Documentation: Merger & Amalgamation

Appointed Date: April 1, 2025 (Start of financial year).

Effective Date: July 1, 2026 (Date NCLT approval is filed with RoC).

Who Owns the Earnings?

Between the Appointed Date and the Effective Date, the transferor company (seller, Company A here) acts as a trustee for the transferee (buyer, Company B here). Therefore, all

profits/earnings and liabilities accrued during this period belong to the Transferee Company (i.e., Company B) .

The appointed date is the specific date specified in a scheme of arrangement from which assets, liabilities, and transactions of a transferor company formally vest in the transferee company, often used for accounting purposes, whereas the effective date is the date when all legal formalities, such as filing approval orders with the Registrar of Companies (RoC), are completed, making the merger legally enforceable.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 2A(iv) (Syllabus 2022).

Rule 15 of the Companies (Compromise, Arrangement and Amalgamation) Rule, 2016 provides as follows:

(1)Where the proposed compromise or arrangement is agreed to by the members or creditors or both as the case maybe with or without modification, the company (or its liquidator),shall, within seven days of the filing of the report by the chairperson, present a petition to the tribunal in Form No.CAA.5 for sanction of the scheme of compromise or arrangement.

(2)Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the Act.

(3)Where the company fails to present the petition for confirmation of the compromise or arrangement as aforesaid, it shall be open to any creditor or member as the case may be, with the leave of the tribunal, to present the petition and the company shall be liable for the cost thereof.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 2(c) (Syllabus 2022).

List of Documents is to be filed in case of a scheme of amalgamation.

In this case there are two companies to the amalgamation, i.e., the Transferor (1st Applicant) and the Transferee (2nd Applicant)

1.Memorandum and Articles of Association of the First Applicant Company

2.Audited Balance Sheet of the First Applicant Company – latest

3.Board Resolution for approval and authorization of the scheme by the First Applicant Company

4.List of Equity Shareholders of the First Applicant Company

5.Consent Affidavits filed by the Equity Shareholders of the First Applicant Company

6.Auditors Certificate stating out the no. of Secured Creditors in the First Applicant Company

7.Auditor’s Certificate listing out the no. of Unsecured Creditor in the First Applicant Company

8.Consent Affidavit filed by no. of Unsecured Creditor of the First Applicant Company

9.Auditors Certificate of the 1st Applicant Company in relation to the accounting treatment proposed in the Scheme of Amalgamation

10.Memorandum and Articles of Association of the Second Applicant Company

11.Audited Balance Sheet of the Second Applicant Company

12.Board Resolution for approval and authorization of the Scheme by the Second Applicant Company

13.List of Equity Shareholders of the Second Applicant Company

14.Auditors Certificate listing out the no. of Secured Creditors in the Second Applicant Company

15.Consent Affidavit filed by the no. of Secured Creditor of the Second Applicant Company

16.Auditors Certificate listing out the no. of Unsecured Creditors in the Second Applicant Company

17.Consent Affidavit filed by the no. of Unsecured Creditor of the Second Applicant Company

18.Auditors Certificate of the 2nd Applicant Company in relation to the accounting treatment proposed in the Scheme of Amalgamation

19.Certificate of the Chartered Accountant for Non-Applicability of obtaining a Valuation Report

20.Fairness Opinion issued by the Merchant Banker on the Scheme of Amalgamation.

21.Undertaking regarding the Non-Applicability of paragraph I(A) 9(a) of Annexure I of SEBI Circular No. CIR/CFD/CMD/16/2015 dated 30 November 2015.

22.Observation Letter issued by the Stock Exchanges approving the Scheme of Amalgamation

23.Scheme of Amalgamation.

As a Practising Company Secretary, the Managing director of the Transferee Company is thus advised accordingly.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 2(d) (Syllabus 2022).

Following are the standard guidelines for presenting an application or petition before NCLT prescribed in National Company Law Tribunal Rules, 2016 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016: -.

1.The petition/application being filed shall fall under the proper territorial jurisdiction of NCLT Bench.

2.The petition/application and all enclosures shall be legibly typewritten in English language. In case it is in some other Indian language, it shall be accompanied by a copy translated in English.

3.The petition/application/appeal/reply shall be printed in double line spacing on one side of the standard petition paper with an inner margin of about 4 cms width on top and with a right margin of 2.5cm left margin of 5 cm and duly paginated, indexed and stitched together in paper book form.

4.The petition/application shall be filed in prescribed form with stipulated fee in triplicate by duly authorized representative of the companies or by an advocate duly appointed in this behalf.

5.The petition shall also be accompanied by an index and memo of the parties.

6.The cause title of the petition/application shall be “Before the National Company Law Tribunal” and it shall also specify the Bench to which it is presented.

7.All the relevant provisions of the Companies Act, 2013/ NCLT Rules, 2016 shall be clearly mentioned in the petition/application.

8.The petition/application shall be divided into paragraphs and shall be numbered consecutively and each paragraph shall contain a separate fact or point.

9.The foot of petition/application shall have name and signature of the authorized representative.

10.The name of the petitioner/applicant along with complete address, viz, the name of the road street lane and municipal division or ward, municipal door and other number of the house, the name of the town or village; the post office; postal district and pin code shall be mentioned in the petition/application.

11.The fax number, mobile number, valid email addresses of the petitioner / applicant shall also be mentioned.

12.Every interlineation, eraser or correction or deletion in petition/application shall be initialled by the party or his authorized representative.

13.The affidavit verifying the petition in Form NCLT-6 shall be drawn on non-judicial /stamp paper of requisite value duly attested by Notary public/Oath Commissioner.

14.Full name, parentage, age, description of each party, date, address and in case a party sues or being sued in a representative character, has been set out in accordance to Rule 20(5) of the NCLT Rules, 2016.

15.Petition/application/ appeal reply has been drawn in the prescribed form i.e., Form No. NCLT.1 with stipulated fee given in the Schedule of these rules. The fee is to be paid by way of demand draft /PO drawn in favour of the “The Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi” or can be paid through online at nclt.gov.in.

16.The documents attached with petition/application shall be duly certified by the authorized representative or advocate filing the petition or application.

17.The annexure to the petition/application shall be serially numbered.

18.The Vakalatnama shall bear court fee stamp.

19.The documents with regard to shareholding/paid-up capital/latest balance sheet of the petitioner/applicant shall be attached.

20.Document other than in English language shall be duly translated and accordingly a translated copy duly certified shall be attached with petition/application.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2(c) (Syllabus 2017).

As per proviso to Section 230(4) of the Companies Act, 2013, any objection to the compromise or arrangement shall be made by persons holding 10% or more of the shareholding or having 5% or more of the total outstanding debt as per latest audited financial statement. Thus, shareholders holding less than 10% or more of the shareholding are not entitled to object to the scheme as matter of statutory right.

There are other built-in safeguards in the matter of approval of the scheme of compromise and arrangements. The notice convening the meetings and also the notice of hearing of the petition (in Form CAA- 2) is required to be published in the newspaper as per the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The notice is also required to be given to various statutory authorities, sectoral regulators, etc. Though there may not be any express protection to any dissenting minority shareholders to file their objections as a matter of right on this issue, the Tribunal, while approving the scheme, may follow judicious approach more particularly in view of the publication of the public notices about the proposed scheme in the newspapers. Any interested person (including a minority shareholder) may appear before the NCLT. There have been, however, occasions when shareholders holding miniscule shareholdings, have made frivolous objections against the scheme, just with the objective of stalling or deferring the implementation of the scheme. The courts have, on a number of occasions, overruled their objections. Thus, shareholders holding less than 10% or more of the shareholding are not entitled to object to the scheme as matter of statutory right.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 1(d) (Syllabus 2022).

According to Rule 3(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, where more than one company is involved in a scheme in relation to which an application under sub-rule (1) is being filed, such application may, at the discretion of such companies, be filed as a joint-application.

Where more than one company is involved in a scheme, such application may, at the discretion of such companies, be filed as a joint-application. In case, the registered office of the companies involved is in different states, there will be two Tribunals having the jurisdiction over those. Both the companies shall have to file separate petition with the respective Tribunals. However, as a matter of practice and smother the process, first registered office of companies may be shifted as per section 12 of the Companies Act, 2013 to a single jurisdiction.

In case of merger application of Dhanrashi Dealcomm Private Limited, Subhshiv Commotrade Private Limited, Touchwin Dealer Private Limited, Trideva Vinimay Private Limited, Dhanganga Commotrade Private Limited, Quality Retailers Private Limited, being the Applicant No. 2, 3, 4, 5, 6, 7 (“Transferor Companies”) with Karni Plaza Makers Private Limited Transferee company joint application was admitted by NCLT. The same saves lot of time/cost and provide convenience. Similarly in case of M/s Sun Pharma Medisales Pvt. Ltd. & Others (Joint Application) NCLT Bench: Ahmedabad allowed joint petition.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2(c) (Syllabus 2022).

Documentation is an important aspect in fulfillment of legal requirements and obligations in merger and amalgamation for an effective and successful venture. The quantum of such obligations will depend upon the size of company, debt structure and profile of its creditors, compliances under the corporate laws, controlling regulations, etc. In all or in some of these cases legal documentation would be involved. If foreign collaborators are involved, their existing agreements would need a mandatory documentation to protect their interests if their terms and conditions so require. Secured debenture holders and unsecured creditors would also seek legal protection to their rights with new or changed management of the amalgamating company. Regulatory bodies like the RBI, Stock Exchanges, SEBI, etc. would also ensure adherence to their respective guidelines, regulations or directives. In this way, while drafting the scheme of merger and amalgamation the transferor and transferee would have to ensure that they meet legal obligations in all related and requisite areas.

Stages Involved in Mergers or Amalgamation

In brief, it can be said that there are broadly eight stages involved in merger and amalgamation, which are listed below:

Stage 1– Drafting of the Scheme.

Stage 2 – Obtaining the approval of the Board of Directors of the companies involved.

Stage 3 – Obtaining approval of the stock exchanges in case of listed companies.

Stage 4 – Application / Petition for convening the meeting of members/creditors shall be filed with National Company Law Tribunal.

Stage 5 – Convening meetings of the Shareholders and Creditors and obtaining their consent on. Stage 6–Scheme Approvals or No objection from Regional Director / Official Liquidator.

Stage 7- Filing of final petition with NCLT for approving the Scheme.

Stage 8 - Obtaining order for approval for scheme of merger/amalgamation from the National Company Law Tribunal.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2A(iv) (Syllabus 2022).

Before any professional commences drafting of any Petition, Written Statement, Replication/Rejoinder or Miscellaneous application (cumulatively called pleadings) or an Interlocutory application before the NCLT, it is absolutely necessary to keep in mind the provisions of Companies Act, 2013, Code of Civil Procedure, Limitation Act, Indian Evidence Act, National Company Law Tribunal Rules, 2016 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and also procedural laws and certain basic and fundamental principles of drafting and pleadings.

1.As per Order 6, Rule 2 of CPC every pleading shall contain only a statement in a concise form of material facts on which the party is relying upon. However, text of documents or evidence in the form of Agreement/MOU, Letters, e-mails, Negotiable instruments, Deeds, written documents or well settled position of law need not be elaborated in the pleadings but only reference is required to be made. Every pleading should not contain arguments. Further, (a) every pleading shall be divided into paragraphs numbered consecutively, catch allegation should be in a separate paragraph (b) dates, sums and numbers shall be expressed in a pleading in figures as well as in words.

2.However, as per Order 6 Rule 4 of CPC, in all cases where the party alleges (a) misrepresentation (b) fraud (c) breach of trust (d) willful default (e) undue influence, the party alleging any of these must state clearly and specifically time, date month or year when any of the aforesaid happened - however, merely vague allegations are not sufficient and adequate and the court will not take cognizance.

3.Before any one proceeds to commence drafting, it is absolutely necessary to gather information/ documents/papers by having extensive discussions with the clients. The information could be gathered by asking the questions on the following points:

•Whether all Factual Details have been taken out

•Whether basic details of the parties have collated

•All Evidence Necessary for Drafting

•Appointment of Additional Directors

•Cessation of Office of Existing Directors

•Removal of Promoter Directors

•Illegal Transfer of Shares / Removal of Directors

•Information can be obtained under Right to Information Act. 2005

4.As per Order 6 Rule 14 of CPC, every pleading shall be signed by the party and his pleader, if any, provided that where a party pleading is, by reason of absence or for other good cause, unable to sign the pleading, it may be signed by any person duly authorized by him to sign the same or to sue or defend on his behalf. The authorization to sign the pleadings could be either by way of (a) Board resolutions in case of body corporate or (b) Power of Attorney duly executed.

5.Generally, the rules prescribe the format of petition or application but does not prescribe the format for filing of Written Statement/Reply or Rejoinder or Replication. Therefore, the contents of petition must always be set out under various headings or sub-headings in accordance with the formal prescribed - otherwise, the Registry of the NCLT or NCLAT may raise objection and petition may not be listed for admission, hearing and consequently, grant of interim relief may be delayed. The petition must adhere to the following:-

(a)Form prescribed

(b)Set brief description of each of the petitioner and respondents

(c)Narrate the Facts.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 2A(i) (Syllabus 2017).

In the event of any approvals or conditions enumerated in the Scheme not being obtained or complied with, or for any other reason, the Scheme cannot be implemented, the Board of Directors of the Transferee Company and the Transferor company shall mutually waive such conditions as they consider appropriate to give effect, as far as possible, to this Scheme and failing such mutual agreement or in case the Scheme not being sanctioned by the Hon'ble NCLT, the Scheme shall become null and void and each party shall bear and pay their respective costs, charges and expenses in connection with the Scheme.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 3(d) (Syllabus 2017).

In cases of a compromise or arrangement in connection with scheme for reconstruction of any company or companies or for amalgamation or merger of any two or more Companies, petitions need to be filed with National Company Law Tribunal (NCLT) in terms of Sections 230 to 232 of the Companies Act, 2013.

There is no definition of either merger or amalgamation in the Companies Act, 2013. Nevertheless, Central Government made Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 that guides effective steps for fruitful results.

Accordingly, steps involved are Drafting the scheme, approvals by Boards of directors of the companies involved, Stock Exchange approvals in case of Listed companies, Application to NCLT to convene meetings of members and creditors and convening of such meetings, No objections from Regional Director and Official Liquidator, Filing petition to NCLT for Approving Scheme and Obtaining orders and filing the orders with Registrar of Companies.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2(a) (Syllabus 2017).

Explanatory Statement of the notice of meeting in respect of the scheme of compromise or arrangement include the following:

(a)Parties involved in compromise or arrangement;

(b)Appointed date, effective dale, share exchange ratio (if applicable) and other considerations, if any;

(c)Summary of valuation report (if applicable) including basis of valuation and fairness opinion of the registered valuer, if any, and the declaration that the valuation report is available for inspection at the registered office of the company;

(d)Details of capital or debt restructuring, if any;

(e)Rationale for the compromise or arrangement;

(f)Benefits of the compromise or arrangement as perceived by the Board of directors to the company, members, creditors and others (as applicable);

(g)Amount due to unsecured creditors.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 3(a) (Syllabus 2017).

Broad stages involved in merger of a company are listed below:

Stage 1 - Drafting of the Scheme

Stage 2 - Obtaining the approval of the Board of Directors of the companies involved

Stage 3 - Obtaining approval of the stock exchanges in case of listed companies

Stage 4 - Application / Petition for convening the meeting of members/creditors shall be filed with National Company Law Tribunal

Stage 5 - Convening meetings of the shareholders and creditors and obtaining their consent on Scheme

Stage 6 - Approvals or No objection from Regional Director / Official Liquidator

Stage 7 - Filing of final petition with NCLT for approving the Scheme

Stage 8 - Obtaining order for approval for scheme of merger/amalgamation from the National Company Law Tribunal.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 3(b) (Syllabus 2017).

In the given question, XYZ Resources Ltd. is the transferor and ABC Transactions Ltd. is the transferee company. Hence, any order of National Company Law Tribunal sanctioning the Scheme of Amalgamation does not automatically operate to make the transferee company a listed company. Further the scheme needs to have a provision for opting out of the scheme with proper compensation for the shareholders of the transferor listed company as per the provisions of section 232(3)(h) of the Companies Act, 2013.

In addition, XYZ Resources Ltd., being a listed company need to file the draft scheme with stock exchange well before filing it with the Tribunal to obtain No Objection or Observation Letter in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The validity of such "No Objection or Observation” Letter is six months and such letter need to be placed before the Tribunal considering the sanction of the Scheme.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 1(b) (Old syllabus).