Corporate Laws LIVE

Scheme of Arrangement Under Companies Act 2013: NCLT Process for Mergers, Demergers

Guide to Scheme of Arrangement under Sections 230-232 of Companies Act 2013. Covers NCLT petition, shareholder/creditor meetings, CCI/SEBI requirements, and effective date of merge...

TaxClue Team Tax & Compliance Expert

May 13, 2026 1 min read 0 views Updated May 24, 2026

Expert Reviewed High Complexity

0:00

A Scheme of Arrangement under Sections 230-232 of the Companies Act 2013 is the court-approved mechanism for mergers, demergers, amalgamations, compromises, and corporate restructuring. It requires NCLT approval and is binding on all shareholders and creditors once sanctioned.

Types of Schemes

Amalgamation (merger) — Transferor merges into Transferee company
Demerger — Business unit transferred to new/existing company
Compromise with creditors — restructuring of debt
Buy-back of shares through scheme
Capital reduction

Step-by-Step NCLT Process

Board Approval: Both companies pass board resolution approving the scheme
First Motion (CA-1): Companies file petition before NCLT seeking directions to convene shareholder/creditor meetings
Meetings: NCLT orders separate meetings of different classes of shareholders and creditors
Approval: Scheme approved by majority in number representing 3/4th in value of shares/debt at meetings
No-objection: Companies obtain NOCs from Income Tax, Stock Exchange, SEBI (for listed), RBI
Second Motion (CA-2): File petition before NCLT for sanction of scheme
NCLT Sanction: NCLT passes order approving scheme
Filing with RoC: Certified copy of NCLT order filed with RoC — effective date of merger

Timeline

Total time: Typically 9-18 months for unlisted companies; up to 24 months for listed companies with SEBI/CCI approvals.

Fast-Track Merger — Section 233

Applicable to: holding-subsidiary mergers, small company mergers, and startups (2024 amendment). No NCLT approval required — just Central Government (RoC) approval. Timeline: 60-90 days. Conditions: No objections from creditors holding 90%+ value + Regional Director approval.

Listed Company Additional Requirements

SEBI's No-Objection Letter (for schemes involving listed companies)
Fairness opinion from SEBI-registered merchant banker on share swap ratio
Disclosure to stock exchanges at each stage
CCI approval if combination thresholds met

Need Expert Help?

TaxClue's CA and legal team can assist you. Contact us or see our services.

Need Help with Compliance?

Our CA experts guide you through the entire process — registration to filing.

Frequently Asked Questions

What majority is needed for scheme approval at meetings?

Majority in number (more than 50% by count) AND 3/4th by value of shares/debt at the meeting.

What is the fast-track merger under Section 233?

Simplified merger process for holding-subsidiary and small company mergers not requiring NCLT — only Central Government (RoC/Regional Director) approval. Takes 60-90 days.

How long does an NCLT merger take?

Typically 9-18 months for unlisted companies, up to 24 months for listed companies needing SEBI/CCI approvals.

When does a merger become effective?

When the certified copy of the NCLT sanction order is filed with the Registrar of Companies. The effective date is specified in the scheme.

Do listed company mergers need SEBI approval?

Yes. SEBI's No-Objection Letter is required, along with a fairness opinion on the share swap ratio from a SEBI-registered merchant banker.

What is the 'swap ratio' in a merger?

The number of shares of the acquiring company issued to shareholders of the merging company for every share they hold. Must be fair and supported by independent valuation.