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CompaniesAct.in: Graduated Fast Track Merger-good days ahead CompaniesAct.in
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Updated On: 26/10/2015

It has been rightly said that “You can't change the fruit without changing the root”, The Companies Act, 2013 proposes a new concept of merger i.e. Fast Track merger for merger between two or more small companies and merger between holding and its wholly owned subsidiary companies and such other class of companies as may be prescribed. Fast track merger would have simplified procedure and would be less time consuming in comparison to normal course of merger. This is a welcome move. The Companies Act, 1956 does not offer a simple process for such mergers and all schemes of arrangement have to follow a cumbersome and time consuming process irrespective of the size and structure of companies or purpose of the arrangement. The existing process involves seeking approval from shareholders, creditors, Registrar of Companies, Regional Director, Official Liquidator as well as Court which takes around Five-Six months. In case where listed companies are involved, there is more than one High Court (as the registered office of companies is different), many creditors are involved the process may further be prolonged by a couple of months more.

There was a long felt need to simplify and fast track the procedure for mergers between holding and its wholly owned subsidiary company and between small companies where interest of third parties is not significant. The Companies Act, 2013 has separate provisions of fast track merger under Section 233 of Companies Act, 2013. These provisions are notwithstanding with the normal provisions of merger under Section 230 and 232 of this Act. Under fast track merger processes Central Government has the power to sanction all such scheme and there will be no requirement to approach National Company Law Tribunal (powers presently exercised by the High Court).






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