233. Merger or amalgamation of certain companies
(1) Notwithstanding the provisions of section 230 and section 232, a scheme of
merger or amalgamation may be entered into between two or more small companies or
between a holding company and its wholly-owned subsidiary company or such other
class or classes of companies as may be prescribed, subject to the following, namely:—
(a) a notice of the proposed scheme inviting objections or suggestions, if any,
from the Registrar and Official Liquidators where registered office of the respective
companies are situated or persons affected by the scheme within thirty days is
issued by the transferor company or companies and the transferee company;
(b) the objections and suggestions received are considered by the companies
in their respective general meetings and the scheme is approved by the respective
members or class of members at a general meeting holding at least ninety per cent. of
the total number of shares;
(c) each of the companies involved in the merger files a declaration of solvency,
in the prescribed form, with the Registrar of the place where the registered office of
the company is situated; and
(d) the scheme is approved by majority representing nine-tenths in value of
the creditors or class of creditors of respective companies indicated in a meeting
convened by the company by giving a notice of twenty-one days along with the
scheme to its creditors for the purpose or otherwise approved in writing.
(2) The transferee company shall file a copy of the scheme so approved in the
manner as may be prescribed, with the Central Government, Registrar and the Official
Liquidator where the registered office of the company is situated.
(3) On the receipt of the scheme, if the Registrar or the Official Liquidator has no
objections or suggestions to the scheme, the Central Government shall register the same
and issue a confirmation thereof to the companies.
(4) If the Registrar or Official Liquidator has any objections or suggestions, he may
communicate the same in writing to the Central Government within a period of thirty days:
Provided that if no such communication is made, it shall be presumed that he has no
objection to the scheme.
(5) If the Central Government after receiving the objections or suggestions or for
any reason is of the opinion that such a scheme is not in public interest or in the interest
of the creditors, it may file an application before the Tribunal within a period of sixty days
of the receipt of the scheme under sub-section (2) stating its objections and requesting
that the Tribunal may consider the scheme under section 232.
(6) On receipt of an application from the Central Government or from any person, if
the Tribunal, for reasons to be recorded in writing, is of the opinion that the scheme should
be considered as per the procedure laid down in section 232, the Tribunal may direct
accordingly or it may confirm the scheme by passing such order as it deems fit:
Provided that if the Central Government does not have any objection to the scheme
or it does not file any application under this section before the Tribunal, it shall be deemed
that it has no objection to the scheme.
(7) A copy of the order under sub-section (6) confirming the scheme shall be
communicated to the Registrar having jurisdiction over the transferee company and the
persons concerned and the Registrar shall register the scheme and issue a confirmation
thereof to the companies and such confirmation shall be communicated to the Registrars
where transferor company or companies were situated.
(8) The registration of the scheme under sub-section (3) or sub-section (7) shall be
deemed to have the effect of dissolution of the transferor company without process of
(9) The registration of the scheme shall have the following effects, namely:—
(a) transfer of property or liabilities of the transferor company to the transferee
company so that the property becomes the property of the transferee company and
the liabilities become the liabilities of the transferee company;
(b) the charges, if any, on the property of the transferor company shall be
applicable and enforceable as if the charges were on the property of the transferee
(c) legal proceedings by or against the transferor company pending before any
court of law shall be continued by or against the transferee company; and
(d) where the scheme provides for purchase of shares held by the dissenting
shareholders or settlement of debt due to dissenting creditors, such amount, to the
extent it is unpaid, shall become the liability of the transferee company.
(10) A transferee company shall not on merger or amalgamation, hold any shares in
its own name or in the name of any trust either on its behalf or on behalf of any of its
subsidiary or associate company and all such shares shall be cancelled or extinguished on
the merger or amalgamation.
(11) The transferee company shall file an application with the Registrar along with
the scheme registered, indicating the revised authorised capital and pay the prescribed
fees due on revised capital:
Provided that the fee, if any, paid by the transferor company on its authorised capital
prior to its merger or amalgamation with the transferee company shall be set-off against the
fees payable by the transferee company on its authorised capital enhanced by the merger
(12) The provisions of this section shall mutatis mutandis apply to a company or
companies specified in sub-section (1) in respect of a scheme of compromise or arrangement
referred to in section 230 or division or transfer of a company referred to clause (b) of subsection
(1) of section 232.
(13) The Central Government may provide for the merger or amalgamation of
companies in such manner as may be prescribed.
(14) A company covered under this section may use the provisions of section 232 for
the approval of any scheme for merger or amalgamation.