Section 232 of the Companies Act, 2013
Section 232 of the Companies Act, 2013
– Merger and Amalgamation of Companies
📜 Bare Act Summary (Simplified):
Section 232 provides the procedure for mergers and amalgamations between two or more companies, including the transfer of assets, liabilities, and share capital.
✅ Key Provisions of Section 232:
📝 1. Scheme of Merger/Amalgamation:
Companies intending to merge or amalgamate must prepare a scheme of merger/amalgamation.
This scheme includes details like:
Transfer of property, liabilities,
Changes in share capital,
Any consideration to shareholders, etc.
🏛️ 2. Tribunal’s Approval (NCLT):
The scheme must be submitted to the National Company Law Tribunal (NCLT).
The Tribunal will:
Call meetings of members/creditors for approval,
Ensure compliance with accounting standards and legal obligations.
📩 3. Notice and Disclosure Requirements:
Notice of the meeting must be sent to:
Shareholders,
Creditors,
Regulators like the Central Government, Income Tax Dept., SEBI, RBI, etc.
These authorities can give objections/suggestions within 30 days.
✅ 4. Sanction by Tribunal:
If satisfied, the Tribunal may approve the scheme.
Once approved:
All properties and liabilities get transferred automatically to the transferee company.
The scheme becomes binding on all parties (companies, members, creditors).
📌 5. Filing with Registrar:
The order passed by the Tribunal must be filed with the ROC by both companies.
🔄 6. Option for Dissenting Shareholders:
If shareholders disagree with the merger, the company may buy back their shares or provide a suitable exit option.
🧾 Example:
Company A plans to merge with Company B. Both companies prepare a merger scheme under Section 232, submit it to the NCLT, hold meetings of shareholders and creditors, and after approval, the assets and liabilities of B are transferred to A.
📌 Summary Table:
| Step | Description |
|---|---|
| Scheme Preparation | Draft scheme of merger/amalgamation |
| NCLT Application | File scheme with Tribunal |
| Notices | Sent to members, creditors, and regulators |
| Tribunal Approval | After review of objections & compliance |
| ROC Filing | File Tribunal order with ROC |
| Result | Assets, liabilities transfer; scheme binding |
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