Fast Track Merger

Section 233 of the Companies Act 2013 read with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules 2016 permits a fast-track merger between: (a) two or more small companies as defined under Section 2(85), (b) a holding company and its wholly-owned subsidiary, or (c) such other class as the Central Government may notify. A public company merging into a private company cannot use Section 233 — that merger must go through the NCLT under Sections 230-232.

Form CAA-9 is the declaration of solvency required under Rule 25(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules 2016. The Board of Directors of each merging company must file it with the Regional Director declaring that the company is solvent and the merger will not prejudice creditors. It must be supported by an auditor's report on the latest audited financial statements. Directors who sign a false declaration are liable under Section 448 of the Companies Act 2013.

Under Section 233(1), each merging company must send notice of the proposed scheme to the Registrar of Companies (ROC) and the Official Liquidator (OL) attached to the High Court, as well as to persons affected by the scheme. The ROC and OL have 30 days from receipt to file objections with the Regional Director. If no objection is received within 30 days, the RD may register the scheme. If objections are filed, the RD may refer the matter to the NCLT under Section 233(7).

Yes. Where shares are issued as consideration to members of the transferor company, the swap ratio must be determined by a registered valuer holding a certificate of registration under Section 247 and Rule 3 of the Companies (Registered Valuers and Valuation) Rules 2017. Where the transferor is a wholly-owned subsidiary, no consideration is payable and shares are cancelled on vesting, so no valuation report is required for the swap ratio, though an auditor solvency report is still needed for CAA-9.

Stamp duty on a merger is levied by the state where the registered office of the transferee company is situated. Rates are ad valorem on net assets transferred and vary by state — for example, Maharashtra levies duty under Article 25 of Schedule I to the Maharashtra Stamp Act 1958. Unlike conveyances under the old Companies Act 1956, there is no blanket Central Government exemption from stamp duty for mergers under the Companies Act 2013, so state-specific stamp law must be checked and duty paid before the scheme is registered by the Regional Director.