Section 233 of CA 2013 : Section 233: Merger Or Amalgamation Of Certain Companies

Explanation using Example

Imagine a scenario where two small tech startups, TechA and TechB, each with an annual turnover less than the threshold defined by the Companies Act for small companies, decide to merge to consolidate their market position and resources. They propose a scheme of merger, which they must execute according to Section 233 of the Companies Act, 2013:

• TechA and TechB issue a notice about their proposed merger to the Registrar, Official Liquidator, and their stakeholders, inviting any objections or suggestions within 30 days.
• The feedback received is discussed in general meetings of both companies, and the merger scheme is approved by at least 90% of the shareholders of each company.
• Both TechA and TechB file declarations of solvency with the Registrar to ensure they are not insolvent.
• The scheme is presented to the creditors, who approve it by a majority representing nine-tenths of their value.

TechB, the transferee company, then files the approved scheme with the Central Government and the Registrar. The Registrar has no objections, so the scheme is registered and confirmed. The merger leads to the dissolution of TechA without winding up, and all its assets, liabilities, and legal proceedings are transferred to TechB. TechB cannot hold shares in its own name post-merger and must adjust its authorized capital accordingly, paying any necessary fees.