India 
Canada
Merger: Two or more companies combine into one, with one company continuing or a new company being formed.
Acquisition: One company takes over another company’s ownership, either by purchasing shares or assets.
Relevant Provisions under Companies Act, 2013
The main provisions relating to mergers and acquisitions are covered under:
Section 230: Compromise, arrangements, and amalgamations.
Section 231: Power of Tribunal to enforce compromises and arrangements.
Section 232: Merger and amalgamation of companies.
Section 233: Fast-track mergers (small companies, holding and subsidiary companies).
Section 234: Merger or amalgamation of a company with a foreign company.
Section 235: Power to acquire shares of dissenting shareholders.
Section 236: Purchase of minority shareholding.
Section 237: Power of the Central Government to provide for amalgamation in the public interest.
The procedural framework is also elaborated in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
Key Procedures for M&A under Companies Act, 2013
1. Application to NCLT (Section 230 & 232)
The company (transferor or transferee) must file an application to the National Company Law Tribunal (NCLT) for calling a meeting of creditors/members.
- The application must be accompanied by:
- Draft Scheme of Merger/Amalgamation.
- Valuation Report by a Registered Valuer.
Latest financial statements and auditor’s report.
2. Notice to Stakeholders
- Notice to be sent to all creditors, members, and regulators like:
- Regional Director
- Registrar of Companies (ROC)
- Official Liquidator
- Competition Commission of India (if applicable)
3. Approval from Stakeholders
- Approval must be obtained through meetings:
- 75% in value of creditors/members present and voting must approve.
4. Approval by NCLT
NCLT reviews the scheme, hears objections, and if satisfied, sanctions the scheme.
After approval, certified copies must be filed with the ROC within 30 days.
Fast-Track Merger (Section 233)
A simplified procedure for:
Two or more small companies, or
A holding company and its wholly-owned subsidiary.
Key Points:
- No need to apply to NCLT.
- Approval from:
- Board of Directors
- Shareholders (90% in value)
- Creditors (majority representing 9/10th in value)
- Post-approval, the scheme is filed with:
- Regional Director
- ROC
Official Liquidator
If no objection is received within 30 days, the Regional Director gives approval.
Cross-Border Merger (Section 234)
Allows mergers between an Indian company and a foreign company (subject to RBI approval).
The foreign company must be incorporated in a jurisdiction notified by the Central Government (for regulatory standards compatibility).
Important Documents Required
- Draft Scheme of Merger/Amalgamation
- Notice of meetings
- Valuation Report
- Auditor’s Certificate (no accounting treatment adverse effect)
- Affidavits and declarations by directors
- List of creditors and members
- Copy of resolutions passed
Recent Updates
The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021 introduced provisions related to mergers of startups and small companies under fast-track mergers.
RBI has also liberalized norms for cross-border mergers.
Conclusion
The Companies Act, 2013 provides a comprehensive and structured framework for mergers and acquisitions to ensure protection of stakeholders’ interests while also encouraging corporate restructuring. Compared to the earlier 1956 Act, the process is more streamlined and transparent, especially with the role of NCLT and fast-track mergers.
