Section 239 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.
Section 239 is a one-sentence rule with a real effect on merger clean-up. Once a company has been amalgamated with another, or its shares have been acquired by another company under Chapter XV, its books and papers cannot be disposed of without the prior permission of the Central Government.
The books and papers of a company which has been amalgamated with, or whose shares have been acquired by, another company under Chapter XV "shall not be disposed of without the prior permission of the Central Government". Before granting permission, the Government may appoint a person to examine the books and papers to see whether they contain evidence of an offence connected with the promotion, formation or management of the transferor company, or with its amalgamation or the acquisition of its shares. The section sets no retention period of its own.
The text, in parts
Section 239 reads: "The books and papers of a company which has been amalgamated with, or whose shares have been acquired by, another company under this Chapter shall not be disposed of without the prior permission of the Central Government and before granting such permission, that Government may appoint a person to examine the books and papers or any of them for the purpose of ascertaining whether they contain any evidence of the commission of an offence in connection with the promotion or formation, or the management of the affairs, of the transferor company or its amalgamation or the acquisition of its shares."
| Element | What the text says |
|---|---|
| Whose books | A company amalgamated with another, or whose shares have been acquired by another, "under this Chapter" (Chapter XV) |
| What is restricted | Disposal of "books and papers" |
| Condition | "Prior permission of the Central Government" |
| Before permission | The Government "may appoint a person to examine" the books and papers |
| Purpose of the examination | To ascertain whether they contain evidence of an offence in connection with promotion or formation, management of affairs, or the amalgamation or share acquisition |
Why the section exists
After a merger, the transferor company usually ceases to exist as a separate entity and its business, assets and liabilities pass to the transferee company. The transferor's own records can then look like clutter: old ledgers, minutes, registers, contracts, bank papers. Section 239 stops the transferee company, or anyone else, from clearing them out on its own decision. The Government keeps the chance to look at the records for signs of an offence first, for example in how the transferor was promoted or run, or in the merger itself.
The section speaks of an offence in connection with "the promotion or formation, or the management of the affairs, of the transferor company". It also covers "its amalgamation or the acquisition of its shares", so the scheme itself can be examined.
If you are planning a merger and need to decide what happens to the old company's records, it helps to settle this early. Our legal consultation team can help you plan record handling as part of the scheme.
What counts as "books and papers"
The section does not define the phrase. Given the purpose, the safe reading is wide: books of account, registers, minutes, correspondence and supporting papers relating to the transferor company. Electronic records should be treated in the same way. Do not rely on a narrow reading to justify clearing out records.
How section 239 relates to the ordinary retention rule
Section 128(5) of the Act, on books of account, requires every company to keep books of account for not less than eight financial years immediately preceding a financial year (or all preceding years if the company has existed for less than eight years), together with vouchers, in good order. Under its proviso, where an investigation has been ordered under Chapter XIV, the Central Government may direct a longer period.
Section 239 works differently:
| Section 128(5) | Section 239 | |
|---|---|---|
| Trigger | Every company, in the ordinary course | Amalgamation, or acquisition of shares, under Chapter XV |
| Rule | Keep books for at least eight financial years (as the section says) | Do not dispose of books and papers without prior permission |
| Who decides on disposal | The company, once the period has passed | The Central Government |
| Covers | Books of account and vouchers | Books and papers generally |
The practical point is that the passing of the ordinary retention period does not, by itself, make the books of an amalgamated company available for disposal. Section 239 applies in addition, so permission is needed before disposal. The text of section 239 does not say that the eight-year period is irrelevant; it simply requires permission for disposal of the listed records.
What happens if the books are disposed of without permission
Section 239 does not state its own penalty. The general provision in section 450 applies where a company, an officer or any other person contravenes the Act or the rules, and "no penalty or punishment is provided elsewhere". In its current form, that section provides for a penalty of ten thousand rupees, and in case of continuing contravention a further penalty of one thousand rupees for each day after the first, subject to a maximum of two lakh rupees for a company and fifty thousand rupees for an officer in default or any other person.
Whether section 450 is the provision the authorities would apply to a breach of section 239 is a matter for legal advice on the facts. Also consider that destroying or falsifying documents during an inquiry or investigation is treated as fraud under section 229. That section applies to documents during an inspection, inquiry or investigation, so it becomes relevant if disposal happens while one is under way.
Liability for offences committed before the merger does not disappear with the merger either. That is the subject of section 240.
Proposed change
We checked the Corporate Laws (Amendment) Bill, 2026 for an amendment to section 239 and found none. Clause 69 of the Bill proposes changes to section 233 (fast-track mergers) and clause 70 a new section 233A, but neither alters section 239. The Bill is pending and is not law as on 30 September 2026.
Practical examples
Example 1: post-merger clean-up. A transferee company has absorbed a subsidiary and wants to shred the subsidiary's old files to save space. Section 239 says it cannot dispose of them without the Central Government's prior permission.
Example 2: examination before permission. The transferee company applies for permission. Before deciding, the Government appoints a person to examine the files to see if they contain evidence of an offence connected with how the subsidiary was run or how the merger was done.
Example 3: acquired, not merged. A company's shares are acquired under Chapter XV and the company continues to exist. The section still refers to a company "whose shares have been acquired", so the books are covered even though there is no amalgamation in the usual sense.
Need help after a merger?
Record handling is easy to overlook once the scheme is sanctioned and filed. We can help you list what has to be kept, prepare the request for permission where disposal is needed, and set up a retention plan for the merged entity. Talk to our team about a legal consultation.
Key takeaways
- The books and papers of an amalgamated company, or of a company whose shares were acquired under Chapter XV, cannot be disposed of without prior permission of the Central Government.
- Before granting permission, the Government may appoint a person to examine the records for evidence of an offence.
- The examination can cover promotion, formation, management, and the amalgamation or share acquisition itself.
- The section sets no retention period and no penalty of its own.
- It operates alongside section 128(5), not in place of it.
- The Bill, 2026 has no clause amending section 239.
Read next
- Section 240: Officer liability for pre-merger offences
- Section 238: Offers involving transfer of shares
- Books of account and statutory registers under the Companies Act, 2013
- Section 232: Merger and amalgamation
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.