Mergers between Indian companies, whether two group companies consolidating or two independent businesses combining, usually take effect through a scheme of amalgamation approved by the NCLT under Sections 230 to 232 of the Companies Act. Once sanctioned, the scheme transfers the assets, liabilities, contracts, employees and proceedings of the transferor company to the transferee company by operation of law, and the transferor is dissolved without winding up.
The process is well-trodden but detailed: a carefully drafted scheme, valuation and accounting certificates, applications for meetings, notices to several regulators, shareholder and creditor approvals and a final hearing. Since September 2025, many more companies can use the simpler fast-track route under Section 233, which goes through the Regional Director instead of the NCLT. This page explains both routes and how to keep the timeline under control.
हिंदी में सारांश
दो या ज़à¥à¤¯à¤¾à¤¦à¤¾ कंपनियों का विलय (merger/amalgamation) आम तौर पर कंपनी अधिनियम की धारा 230-232 के तहत NCLT से मंज़ूर सà¥à¤•à¥€à¤® के ज़रिठहोता है। इसमें सà¥à¤•à¥€à¤® तैयार करना, मूलà¥à¤¯à¤¾à¤‚कन, NCLT में पहला आवेदन (first motion), शेयरधारकों और लेनदारों की बैठकें या उनसे छूट, सरकारी विà¤à¤¾à¤—ों को नोटिस और फिर अंतिम याचिका (second motion) शामिल है। सितंबर 2025 से कई और कंपनियां धारा 233 के तहत तेज़ पà¥à¤°à¤•à¥à¤°à¤¿à¤¯à¤¾ (fast-track) से रीजनल डायरेकà¥à¤Ÿà¤° के ज़रिठविलय कर सकती हैं।
Is this your situation?
- You want to merge two or more companies in your group to simplify the structure
- You are acquiring a business and want to merge the target into your company
- Your group has dormant or overlapping companies that should be combined
- You need to transfer assets, licences and contracts in one step rather than individually
- You want to know whether your merger can use the fast-track route
- A merger scheme has been filed and objections have been raised
Two routes to a merger
NCLT route (Sections 230 to 232)
Available to all companies. Needs NCLT sanction after meetings (or dispensation) and regulator notices. Suitable for listed companies, larger unlisted companies and mergers involving creditors with significant exposure.
Fast-track route (Section 233)
Approved by the Regional Director, not the NCLT, after shareholder and creditor approvals and notices to the ROC and Official Liquidator. Faster and cheaper where eligible.
Who can use the fast track (since 2025)
In addition to small companies, start-ups and holding companies with wholly owned subsidiaries, the 2025 amendment to the rules extended the route to: unlisted companies (other than Section 8 companies) with outstanding loans, debentures or deposits not exceeding Rs 200 crore and no repayment default; a holding company and its subsidiary where the transferor is unlisted; subsidiaries of the same holding company; and a foreign holding company with its wholly owned Indian subsidiary.
When the fast track is referred to the NCLT
If the Regional Director considers the scheme not in the public interest or creditors' interest, it can refer the scheme to the NCLT, which may then consider it under Section 232.
Cross-border mergers
Mergers with foreign companies follow Section 234 and FEMA rules. See cross-border mergers.
Demergers
Splitting off a business uses the same sections with additional considerations. See demerger.
The NCLT route, step by step
Structure and scheme drafting
We agree the structure, appointed date, share exchange ratio and treatment of employees, contracts and litigation, and draft the scheme. The board of each company approves it.
Valuation and accounting certificates
A registered valuer's report supports the share exchange ratio, and each company's auditor certifies that the accounting treatment in the scheme conforms to the applicable accounting standards.
First motion application
The companies file a joint or separate application before the NCLT bench(es) with jurisdiction over their registered offices, seeking directions for meetings of shareholders and creditors, or dispensation where consents are already obtained.
Notices and meetings
The NCLT directs notices to the central government (Regional Director), ROC, income tax authorities, the Official Liquidator, and where relevant RBI, SEBI, the Competition Commission and stock exchanges. Meetings approve the scheme by a majority in number representing three-fourths in value of each class present and voting, unless dispensed with.
Second motion petition
After the meetings, the companies file a petition for sanction. The Regional Director and Official Liquidator file reports. Objections, if any, are heard.
Sanction and filing
The NCLT sanctions the scheme. A certified copy of the order is filed with the ROC within 30 days, and the merger takes effect from the appointed date as provided in the scheme.
Points that often cause delay
Different benches
Where the merging companies have registered offices in different states, applications may be needed before more than one bench. Planning the filings together saves months.
Income tax objections
Tax authorities may object if they think the scheme is designed mainly to avoid tax. The scheme's commercial rationale should be clear.
Creditor and lender consents
Lenders often require their consent under loan agreements. Obtaining no-objection letters early helps with dispensation of creditors' meetings.
Regional Director's observations
Common observations relate to authorised capital, stamp duty, accounting treatment and compliance with FEMA. Addressing them quickly avoids adjournments.
Pending litigation and licences
Licences, registrations and pending cases transfer by operation of the order, but some regulators require separate intimation or approval.
Stamp duty
Stamp duty on the NCLT order, as applicable in the state where property is located, must be planned for.
Time and typical cost
Our fees are agreed in writing in advance for each stage and do not depend on the outcome. Valuer's and auditor's fees, filing fees and stamp duty are separate.
| Stage | Usual time | What it involves |
|---|---|---|
| Structuring and drafting | 3 to 6 weeks | Scheme, valuation, certificates, board approvals |
| First motion | 1 to 3 months | Application, order for meetings or dispensation |
| Notices and meetings | 1 to 2 months | Regulator notices, meetings |
| Second motion and sanction | 2 to 5 months | Petition, RD and OL reports, hearing |
| Fast-track route (if eligible) | Often 3 to 6 months | Approvals, notices, RD confirmation |
Documents you will need
Corporate
- Certificates of incorporation, MOA and AOA of each company
- Board resolutions approving the scheme
- Shareholding patterns
Financial
- Audited financial statements and latest provisional accounts
- Valuation report and fairness opinion (if listed)
- Auditor's certificates on accounting treatment
Creditors and approvals
- List of secured and unsecured creditors with amounts
- Consent affidavits or lender NOCs
- Regulatory approvals required for the sector
Consolidating three group companies
Here's a made-up example. A family group in Noida had a manufacturing company and two small trading companies that sold its products, all wholly owned by the family through the manufacturing company. Separate compliance and inter-company transactions had become expensive.
Because the trading companies were wholly owned subsidiaries, the merger qualified for the fast-track route under Section 233. We drafted the scheme, obtained shareholder and creditor approvals, and gave notice to the ROC and Official Liquidator. The Regional Director confirmed the scheme without referring it to the NCLT, and the two trading companies merged into the manufacturing company in about four months.
Mistakes companies make in mergers
- Not checking fast-track eligibility: many group mergers now qualify for Section 233 after the 2025 amendment. Going through the NCLT unnecessarily adds months.
- An unrealistic appointed date: choosing an appointed date far in the past can attract objections, especially from tax authorities.
- Ignoring lender consents: loan agreements often require consent for mergers. Lenders who learn late may object.
- Weak commercial rationale: schemes that appear designed mainly to save tax draw objections. Explain the business reasons clearly.
- Overlooking stamp duty: state stamp duty on the order can be significant, especially where property is transferred.
- Not planning post-merger steps: licences, bank accounts, GST registrations and contracts need updating after the merger takes effect.
Key terms in plain words
| Term | What it means |
|---|---|
| Transferor company | The company that merges into another and is dissolved |
| Transferee company | The company that receives the business and survives |
| Appointed date | The date from which the merger takes effect for accounting purposes |
| Effective date | The date the order is filed with the ROC, when the merger becomes operative |
| Share exchange ratio | The number of transferee shares issued for each transferor share |
| First motion | The application for directions on meetings |
| Second motion | The petition for sanction of the scheme |
The role of the Regional Director and Official Liquidator
In an NCLT merger, the Regional Director reviews the scheme on behalf of the central government and files a report raising any concerns, such as compliance with filings, accounting treatment, authorised capital and the interests of stakeholders. The Official Liquidator reports on whether the transferor company's affairs have been conducted in a manner prejudicial to its members or the public interest, because the transferor will be dissolved without winding up. On the fast track, the Regional Director confirms the scheme, after considering objections from the ROC and the Official Liquidator. Addressing their observations promptly is often what decides how quickly a scheme is sanctioned.
Checklist before drafting the scheme
- Decide the appointed date and the effective date
- Confirm whether the fast-track route under Section 233 is available
- Get a share exchange valuation report from a registered valuer
- Obtain an auditor's certificate that the accounting treatment follows the standards
- List creditors of each company with amounts, certified by the directors
- Check whether CCI approval is needed under the deal-value or asset/turnover thresholds
- Check sectoral approvals (RBI, IRDAI, SEBI, telecom or others)
- Review lender consents needed under loan agreements
Choosing between NCLT and fast track
Since 4 September 2025, many more mergers qualify for the fast-track route under Section 233. Along with small companies and start-ups, it now covers unlisted companies with outstanding borrowings of up to Rs 200 crore and no default, a holding company merging with its subsidiary where the transferor is unlisted, mergers of fellow subsidiaries of the same holding company, and a foreign holding company merging into its wholly owned Indian subsidiary.
Fast track avoids NCLT hearings: the scheme is approved by shareholders holding 90% of the shares and by creditors representing nine-tenths in value, and then confirmed by the Regional Director. If the Regional Director has objections, the matter goes to the NCLT. Where the 90% shareholder approval is hard to obtain, or where creditors are spread out, the NCLT route under Sections 230 to 232 may still be easier. We compare both before recommending a route. See also demerger and cross-border mergers.
Two sister companies in Ghaziabad
Here's a made-up example. A family group in Ghaziabad owned two unlisted packaging companies, both subsidiaries of a family holding company. They wanted to combine them to save costs and simplify their bank arrangements. Their combined borrowings were well under Rs 200 crore and neither had defaulted.
As fellow subsidiaries of the same holding company, they qualified for fast track. Notices went to the ROC, the official liquidator and the income tax department. The shareholders and creditors approved the scheme by the required majorities. The Regional Director raised one query about a pending GST demand, which the companies answered by confirming that the merged company would take on the liability. The Regional Director confirmed the scheme without an NCLT hearing.
Frequently Asked Questions
Do all mergers need NCLT approval?
No. Eligible companies can use the fast-track route under Section 233, approved by the Regional Director. Others go through the NCLT under Sections 230 to 232.
Which companies can use the fast track after 2025?
Small companies, start-ups, holding companies and wholly owned subsidiaries, and since September 2025 also many unlisted companies with borrowings up to Rs 200 crore and no default, holding-subsidiary pairs with an unlisted transferor, fellow subsidiaries, and foreign holding companies with Indian wholly owned subsidiaries.
How long does an NCLT merger take?
Typically six to twelve months, depending on the bench, objections and whether meetings are dispensed with.
Can meetings of shareholders and creditors be avoided?
The NCLT can dispense with meetings where the required consents are obtained through affidavits, commonly from 90% in value.
What approval is needed at meetings?
A majority in number representing three-fourths in value of each class of shareholders or creditors present and voting.
What happens to the transferor company's employees and contracts?
They transfer to the transferee by operation of the sanction order, on terms set out in the scheme.
Is stamp duty payable on a merger?
Yes, as applicable under state stamp laws, usually on the NCLT order or the Regional Director's confirmation.
How are your fees decided?
By the number of companies and complexity, agreed in writing in advance. They do not depend on the result.
Planning a Merger?
Share the group structure and the commercial objective. We will check fast-track eligibility and map the quickest compliant route.
This page gives general information about the law as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. IBC rules and NCLT procedures change often, so outcomes depend on your own documents, dates and facts.
Need help with Merger & Amalgamation Schemes?
Send us the notice, the petition or the order. We will tell you where you stand, which bench hears it and the date the next step is due, in plain words.
