Eligibility for Fast Track Merger of Pvt Limited companies

Co Act 2013 369 views 2 replies

Paras K

Self-employed

52 Points Posted on 29 April 2021

Hi,

I have few queries relating to fast track mergers feature which was made available by Companies Act 2013 u/s 233, which allows companies to go for Merger and Acquistion without involvement of Court.

Please refer to the structure of companies I have attached in Image, for better understanding of my queries.

It is mentioned that only small companies, and holding companies with wholly owned subsidiary can opt for Fast track merger. Since small companies definition as per section 2(85) excludes holding and subsidiary companies its ambit, will ABC private limited be able to opt for fast track merger with LMN Pvt Ltd, in which it only holds 99% of shares?
Can PQR Pvt Ltd be considered as deemed Wholly owned subsidiary of ABC Pvt Ltd? If yes, then is merger between these 2 Pvt Ltd possible under Fast track method?
Is separate applications required for merging more than 2 companies at a time? Eg. Merging ABC Pvt Ltd, XYZ Pvt Ltd and PQR Pvt Ltd.

I would be glad if you could quote relevant sections for your answers. Thanks in advance.

Attached File : 3379171 20210429151004 untitled.jpg downloaded: 77 times

Replies (2)

yasaswi gomes

My grammar is 💯 good I

7301 Points Posted on 03 May 2021

That Merger & Amalgamation (M & A) may be entered between 2 or more small companies having paid up capital less than Rs.5 million and turnover less than Rs.20 Million; or

That Merger & Amalgamation maybe entered between holding and its wholly owned subsidiary company;

That Merger & Amalgamation may be entered between other classes or classes of companies as may be prescribed.

The above are allowed even if they are holding or private because fast track merger overwrites all laws.

Other public companies’

Section 8 Companies under the act

Companies regulated under special act

The above are are examples of exactly what companies are not allowed in this process. All three companies can merge at a time

Paras K

Self-employed

52 Points Posted on 04 May 2021

Thank you for your answer.

So to summarize your answer:

1. A holding pvt ltd company can merge with it's subsidiary (even if it is not wholly owned subsidiary) under Fast track merger. (provided both pvt ltd fits the small company criteria for paid up capital and turnover)

2. Holding pvt ltd company can merge with multiple subsidiaries under Fast track merger by filing a single Scheme of merger

(please correct if I'm wrong)