Companies Act, 2013

Procedure for Merger and Amalgamation of Companies

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Ronak Sharma Ronak Sharma
Ronak Sharma

Published on: Apr 8, 2026

Shreya Mitra
Shreya Mitra

Updated on: Apr 8, 2026

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Introduction

Mergers and Amalgamations (M&A) are strategic corporate restructuring tools enabling organisations to achieve growth, consolidation, operational efficiencies, market expansion, and long-term value creation. Beyond legal compliance, such transactions require strong governance oversight, stakeholder alignment, risk evaluation, and capital market awareness, particularly for listed entities.

While the terms ‘Merger’ and ‘Amalgamation’ are not formally defined in the law, they generally describe:

  1. Merger: Combination of entities where one company survives and absorbs others. The goal is to integrate the businesses, not just combine assets.
  2. Amalgamation: Combination where two or more entities merge into a new company, and the original companies are dissolved.

The process is governed by Sections 230 to 232 of the Companies Act, 2013, SEBI Regulations (where applicable), and requires various filings and approvals from the NCLT.

Merger

Combination of Two or more Companies where one company survives and absorbs others.

Amalgamation

Two or More Companies joined to form a completely new entity.

Applicable Provisions

  1. Section 230, 231, 232 of Companies Act, 2013
  2. Rule 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
  3. Regulation 11, 37 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
  4. SEBI Master Circular relating to Schemes of Arrangement (for listed entities)
  5. Applicable accounting standards including IND AS 103

Mandatory Requirements

  1. Consent from promoters, shareholders, directors, creditors, members of the company approving scheme of Merger/ Amalgamation
  2. Obtain:
    • Valuation Report from a Registered Valuer to determine the Share Exchange Ratio (Swap Ratio)
    • Statutory auditor’s certificate, confirming that the accounting treatment, in the scheme complies with relevant AS
  3. Affidavit must be prepared disclosing the latest financial position, latest auditor’s report, and the pendency of any legal investigations or proceedings
  4. Evaluation of ESOP treatment, employee transition, and tax neutrality considerations.

Step-by-Step Procedure

  1. Strategic Rationale & Governance Readiness
    • Board Evaluation

      Prior to initiating the merger process, the Board should evaluate:

      • Strategic rationale and long-term business alignment
      • Impact on shareholder value and minority protection
      • Conflicts of interest and related party implications
      • Independent Director oversight, wherever applicable
      • Risk assessment including regulatory, operational, and integration risks
      • Preliminary stakeholder communication strategy.
    • Role of Board Committees
      • Audit Committee: Review accounting treatment, valuation methodology, fairness opinion (wherever applicable), and financial reporting impact
      • Risk Management Committee: Evaluate integration risk, operational continuity, regulatory exposure, and post-merger control environment
      • Nomination & Remuneration Committee: Assess leadership structure, talent retention strategy, and organizational redesign post-merger
      • Independent Directors: Provide objective assessment ensuring transparency, fairness, and protection of minority interests.
    • Scrutiny of MoA & AoA of Companies involved in Merger

      Check whether MOA and AOA of companies involved in merger or amalgamation contains provision for Merger/Amalgamation. If provision for merger/amalgamation is absent, then object clause of MOA and AOA, to be amended and such clause is to be added in MOA and AOA of the companies proposed to be merged.


      [Kindly refer Procedure for change in Objects of the Company https://www.lawrbit.com/companies-act-procedures/change-in-objects-of-the-company/]
  2. Intimate Board Meeting Date to Consider M&A Proposal, to the Stock Exchange

    Listed Companies shall at least 02 working days in advance, excluding the intimation date and the Board Meeting date, where the proposal of M&A shall be noted, intimate the Stock Exchange, on the same.

  3. Convene Meeting of Board of Directors
    • Issue Notice of Board Meeting, to all the Directors of Company, at their addresses registered, with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
    • Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
    • Hold a meeting of Board of Directors and pass a Board Resolution for the following:
      • Proposed Scheme of Merger/Amalgamation
      • Appointment of Legal Professionals to oversee and manage the entire merger/amalgamation process
      • Appointment of a Registered Valuer to determine the share valuation and the mandatory Share Exchange Ratio.
      • Authorization for initiating the process before the National Company Law Tribunal (NCLT).
    • Listed Company shall submit the disclosure of outcome of Board Meeting to the Stock Exchange within 30 minutes from the date of the Board Meeting and post the same on the website of the Company within 2 working days.
    • Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments.
      [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]

    *Note – In case the meeting of the board of directors closes, after normal trading hours of that day, but more than 3 hours, before the beginning of the normal trading hours, of the next trading day, the listed entity shall disclose the decision pertaining to the event or information, within 3 hours from the closure of the board meeting.

  4. Prepare Draft Scheme of M&A between Companies

    Company shall prepare draft scheme of M&A, which must clearly:

    • Identify the parties (companies being merged/amalgamated and the existing/new company)
    • Specify the Appointed Date of the merger/amalgamation
    • Stipulate the complete transfer of all assets, liabilities, legal proceedings, and licenses of the merging company to the surviving entity effective from the Appointed Date.
  5. Convene Meeting of Board of Directors for Approval of Draft Scheme

    Company shall convene a Meeting of its Board of Directors, to pass a Board resolution for approval of Draft Scheme of Merger or Amalgamation.
    [Kindly refer Procedure for Conducting Board Meeting https://www.lawrbit.com/companies-act-procedures/conducting-board-meeting/]

  6. Obtain No Objection Letter from Stock Exchange

    Listed Company shall file the draft scheme, with the Stock Exchange(s), along with a fee, to obtain a No-Objection Letter, from the Stock Exchange(s), on which it is listed, before submitting First Motion Petition before Tribunal for approval.

  7. File First Motion Petition before NCLT

    Company shall file its application, for first motion petition,, by way of appointed legal representative, before concerned NCLT, in whose jurisdiction registered office of the Company is situated, in Form No. NCLT-1, stating details about applicant, jurisdiction, limitation, etc. of the company, along with Notice of Admission of Scheme of M&A, in Form No. NCLT-2 and affidavit in Form No. NCLT-6, disclosing the following details:

    • Material Facts relating to company such as latest financial position of company
    • Latest Auditor’s Report on accounts of company and Pendency of any investigation or Proceedings against Company
    • Reduction of Share Capital of company, if any, included in compromise or arrangement
    • Any Scheme of CDR, consented to by not less than 75% of secured creditors in value, including:
      • Creditor’s Responsibility Statement in Form No. CAA.1
      • Safeguards for Protection of Other Secured and Unsecured Creditors
      • Auditor’s Report ensures post- CDR, liquidity meets the test, using Board estimates
      • If the company proposes to adopt the CDR guidelines, specified by the RBI, a statement to that effect
      • Valuation Report in respect of shares and property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer
    • No-objection letter of the Stock Exchange(s).

    Note: In case more than one company is involved in a scheme of M&A, then a joint application can be filed at the discretion of such companies, before the tribunal.

  8. Calling of Meeting by NCLT

    After careful perusal of the draft M&A scheme and other documents, if the tribunal, is of the opinion that the scheme, has met all the requisite conditions, it may call for a class(es), of creditor(s) or of members meeting and may order directions, as mentioned below:

    • Determination of classes of creditors or members who shall be considered for meeting
    • Fix the time and place of the meeting for approval of scheme
    • Appoint chairperson for the meeting
    • Fix quorum and procedure to be followed at meeting
    • Mode of voting, namely, in person or by proxy or by ballot
    • Notice of Meeting and advertisement of notice
    • Notice to be given to Sectoral Regulators or Authorities
    • Time within which the chairperson of the meeting is required to report result of the meeting to Tribunal
    • Such other matters as the Tribunal may deem necessary.
  9. Issue Meeting Notice as per NCLT Order

    As per directions from NCLT, Company shall issue notice of meeting of any class(es) of creditors or members, in Form no. CAA.2, at least one month, prior to scheduled meeting date, to creditors, promoters, shareholders, members and debenture holders of the company, along with a copy of scheme and a statement disclosing details of merger including the process of transfer of assets, appointed date of merger, audited financial statements, Auditor’s report, effect of merger on assets and liabilities, valuation report of company, etc.

    Note: Any objection to the compromise or arrangement shall be made only by persons holding not less than 10% of the shareholding or having outstanding debt amounting to not less than 5% of the total outstanding debt as per the latest audited financial statement.

  10. Publish Notice of Merger

    The notice for the meeting (under Section 230(3) of the Act) must be publicly advertised, at least 30 days before the meeting date, using Form No. CAA.2, in the following places:

    • Newspapers: In at least one English newspaper and one vernacular (local language) newspaper that has wide circulation in the state where the company’s registered office is located (or as directed by the Tribunal).
    • Websites: On the official websites of the Company, SEBI, and the recognized stock exchange where the company’s securities are listed.

    Note: If separate meetings are held for different classes of creditors or members, a single joint advertisement can be used for all of them.

  11. Notice to Statutory Authorities and Regulators

    In compliance of directions from NCLT, Company shall also send notice, in Form no. CAA.3, to all the relevant stakeholders and regulators of companies such as RoC, ITD, Official Liquidator, RBI, CG, etc. for inviting objections, if any to the scheme. If there are any objections with regards to merger between the company then the concerned department or authority shall make its legal representation, before the NCLT within 30 days from the date of receipt of notice.

  12. Filing of Affidavit of Compliance by Chairperson before NCLT

    Chairperson as appointed by NCLT shall file an affidavit of compliance, before NCLT, not less than seven days, before the date fixed for the meeting, as per orders from NCLT, stating that the directions mentioned in the NCLT order, have been duly complied with and been duly served inviting objections, if any, to statutory authorities and regulators, informing them about M&A, of the company.

  13. Conduct of Meeting for approval of Scheme of Merger

    In compliance of directions from NCLT, Company shall convene Meeting with all the stakeholders such as directors, creditors, shareholders, promoters involved in the merger of companies. At the meeting, the proposal must be approved by a majority of persons representing three-fourths (75%) in value of the creditors, class of creditors, members, or class of members who vote (in person, by proxy, or postal ballot).

  14. Filing of Report of Result by Chairperson before NCLT
    • Chairperson appointed by the Tribunal shall prepare report of result of meeting and submit it in Form No. CAA.4, as per the timeline fixed by the Tribunal, and in case no time has been fixed, the report shall be filed, within three days after the conclusion of the meeting.
    • Such report shall state accurately the number of creditors or class of creditors or the number of members or class of members, as the case may be, who were present and who voted at the meeting either in person or by proxy, and wherever applicable, who voted through electronic means, their individual values and the way they voted.
  15. Filing of Second Motion Petition before NCLT
    • After filing of report of result, by Chairperson before NCLT, Company shall file its second motion petition in Form No. CAA.5, within 7 days of filing of report of result, for its approval.
    • NCLT shall also fix a final date of hearing of second motion petition and for final order for approval of draft scheme of merger between the companies.
  16. Publish Notice of Final Hearing in Newspaper
    • Notice of Final Hearing as fixed by NCLT shall be advertised for general public, in the same newspaper, in which notice for conduct of meeting was published, at least 10 days before the date of final hearing.
    • Notice of final hearing shall also be sent to statutory authorities and regulators, for invitation of objections, if any before the merger is sanctioned by NCLT.
  17. Final Order from NCLT approving Scheme of Mergers
    • After careful perusal of M&A scheme and relevant documents filed, before the NCLT, such scheme, may be approved, by way of an order in Form No. CAA.7, after being satisfied, that all the provisions under Companies Act and Rules have been duly complied by the company.
    • The final order of merger shall contain details like protection of classes of distributors of company, if there is any conversion of preference shares to equity shares, any variation in rights of shareholders of company, etc.
    • NCLT may also in its wisdom modify M&A scheme and deliver such order of merger, as it deems appropriate.
  18. Filing of Merger Order with RoC

    After pronouncement of judgement of merger of companies, a certified copy of the final order, approving merger shall be duly filed with the RoC, in Form INC-28, in whose jurisdiction registered office of the Company is situated, within thirty days, from the date of the receipt of the order.

  19. Filing of Statement of Compliance

    After receipt of all the approvals from the concerned authorities and implementation of approved M&A scheme, a Statement of Compliance of Merger, duly certified by CA/ CS/ CMA in practice, in Form No. CAA. 8, along with the prescribed fee, within 210 days from the end of each financial year, shall be filed with the RoC.

  20. File Necessary Amendment Application under the following Acts:
    • Goods and Services Act
    • Shops & Establishment Act
    • Factories Act
    • Inter-State Migrant Workmen Act
    • Private Security Agency Act
    • Employees Provident Fund Organization
    • Employees State Insurance Corporation
    • Other Labour Laws
    • Industry-Specific Laws.

Abbreviations

  • NCLT: National Company Law Tribunal
  • RoC: Registrar of Companies
  • MoA: Memorandum of Association
  • AoA: Articles of Association
  • M&A: Mergers and Amalgamations
  • CDR: Corporate Debt Restructuring
  • RBI: Reserve Bank of India
  • ITD: Income Tax Department
  • AS: Accounting Standards
  • CG: Central Government
  • CA: Chartered Accountant
  • CS: Company Secretary
  • CMA: Cost and Management Accountant
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