Rules 1 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rules 1 to 4 are the opening rules for every scheme of compromise or arrangement under section 230 of the Companies Act, 2013. They fix when the rules began, define the terms, say how the first application to the Tribunal is made and with what documents, and require the creditors' responsibility statement in Form CAA.1 where a scheme restructures debt. This article reads the rules as amended up to G.S.R. 603(E) dated 4 September 2025 per the MCA e-book; later amendments should be checked before you rely on it.
The rules came into force on 15 December 2016 (G.S.R. 1134(E) of 14 December 2016). A scheme starts with an application under section 230(1) in Form NCLT-1, with a notice of admission in NCLT-2, an affidavit in NCLT-6, the scheme itself and the fee in the Schedule of Fees. Rule 4 adds the creditors' responsibility statement in Form CAA.1 to a scheme of corporate debt restructuring. A takeover-offer application by a member holding at least three-fourths of the shares needs a valuer's report and a separate bank account.
Rules 1 and 2: commencement and definitions
Rule 1 gives the short title and states that the rules came into force from 15 December 2016. Rule 2 defines the terms used:
| Term | What the rule says |
|---|---|
| "Act" | The Companies Act, 2013 |
| "Annexure" | An annexure to these rules |
| "Form" | A form set out in Annexure A, to be used for the matter it relates to, including its electronic version |
| "Liquidator" | A liquidator appointed under the Act or under the Insolvency and Bankruptcy Code, 2016 |
| "Corporate action" | Inserted from 17 December 2020: any action by the company relating to transfer of shares and all benefits on them, namely bonus shares, split, consolidation, fractional shares and rights issue to the acquirer |
Rule 2(2) adds that words not defined here but defined in the Act, in the Companies (Specification of Definitions Details) Rules, 2014 or in the National Company Law Tribunal Rules, 2016 carry the meaning given there. Where a scheme involves a company under insolvency proceedings, the Insolvency and Bankruptcy Code, 2016 is a separate law and is not explained here.
Rule 3: the application for an order for a meeting
Rule 3(1) says an application under section 230(1) may be submitted in Form NCLT-1 (appended to the NCLT Rules, 2016), together with:
- a notice of admission in Form NCLT-2;
- an affidavit in Form NCLT-6;
- a copy of the scheme of compromise or arrangement, which should include the disclosures under section 230(2); and
- the fee prescribed in the Schedule of Fees.
The Schedule of Fees is explained in a later article of this series. If you want the filing set checked before it goes to the Tribunal, our legal consultation team can do that. Four further sub-rules shape the filing.
- Joint application (3(2)). Where more than one company is involved, the application may be filed jointly, at the discretion of those companies.
- Service on the company (3(3)). Where the company is not the applicant, a copy of the notice of admission and the affidavit goes to the company, or to its liquidator if it is being wound up, not less than fourteen days before the date fixed for hearing the notice of admission.
- Classes (3(4)). The applicant must disclose in the application the basis on which each class of members or creditors has been identified for approving the scheme.
- Takeover offers (3(5) and (6)). Inserted by the Amendment Rules of 3 February 2020 and effective from 7 February 2020.
Takeover-offer applications
Under rule 3(5), a member makes an application for an arrangement for a takeover offer under section 230(11) when that member, along with any other member, holds not less than three-fourths of the shares and the application is to acquire any part of the remaining shares. "Shares" means equity shares carrying voting rights and includes securities such as depository receipts that entitle the holder to exercise voting rights. The rule does not apply to a transfer or transmission through a contract, arrangement or succession, or a transfer made under a statutory or regulatory requirement.
Under rule 3(6), such an application must contain:
- the report of a registered valuer on the valuation of the shares to be acquired, taking into account the highest price paid by any person or group of persons for the shares in the last twelve months, and the fair price determined by the valuer on parameters such as return on net worth, book value, earning per share and price earning multiple against the industry average; and
- details of a separate bank account opened by the member, in which a sum of not less than one-half of the total consideration of the takeover offer is deposited.
Rule 4: the creditors' responsibility statement
Rule 4 is short. For section 230(2)(c)(i), the creditors' responsibility statement in Form CAA.1 is to be included in the scheme of corporate debt restructuring. The Explanation clarifies that a scheme of corporate debt restructuring means a scheme that restructures or varies the debt obligations of a company towards its creditors. Our format note on the creditors' responsibility statement in CAA-1 shows how it is usually laid out.
Form CAA.1 is used only for this statement. The application for the meeting itself is not in a CAA form: rule 3 uses the NCLT forms.
Example
Greenfield Textiles Private Limited has creditors across three classes and wants to vary the repayment terms of its bank debt and its trade creditors. Its application under section 230(1) goes in Form NCLT-1 with NCLT-2, NCLT-6, the scheme and the fee. Because the scheme restructures the company's debt obligations, the scheme carries the CAA.1 statement. Greenfield's Board also records, in the application, how it identified each class of creditors. Our note on section 230 of the Companies Act, 2013 covers the section itself.
Where each CAA rule is explained
| CAA rules | Subject | Article in this series |
|---|---|---|
| 1-4 | Commencement, definitions, application, creditors' statement | This article |
| 5-8 | Directions, notice of meeting, advertisement, notice to authorities | Article 2 |
| 9-14 | Voting, proxies, affidavit of service, result of the meeting | Article 3 |
| 15-17 | Petition to sanction, hearing, order | Article 4 |
| 18-24 | Section 232 mergers, report, liberty to apply | Article 5 |
| 25 | Fast-track mergers | Article 6 |
| 25A | Cross-border mergers | Article 7 |
| 26-27 | Dissenting shareholders and minority purchase | Article 8 |
| 28-29, fees | Takeover circular, appeal, Schedule of Fees | Article 9 |
Need help with a scheme of arrangement?
If your scheme needs an application, class identification or the creditors' statement prepared, our team can take you through the filing sequence. You can speak to us through our legal consultation page before the application is drawn up.
Key takeaways
- The rules took effect on 15 December 2016; the Form definition includes the electronic version.
- The application is in Form NCLT-1 with NCLT-2, NCLT-6, the scheme and the fee.
- The applicant must say how each class of members or creditors was identified.
- A takeover-offer application needs the three-fourths holding, a registered valuer's report and a bank account holding not less than one-half of the consideration.
- Form CAA.1 is the creditors' responsibility statement for a scheme of corporate debt restructuring.
Read next
- Rules 5–8: the Tribunal's directions, CAA-2 notice and notice to authorities
- Rule 25: fast-track merger under the CAA Rules
- Section 230: compromise or arrangement
- Creditors' responsibility statement in CAA-1: format
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.