The Fast Track Merger in Punjab Process, which introduces a simple and quick procedure for mergers and amalgamations of certain classes of companies,.

Eligible for Fast Track Merger in Punjab:

A scheme of merger or amalgamation under Section 233 of the Act may be entered into between any of the following classes of companies:

1. Two or more start-up companies.
2. One or more start-up companies with one or more small companies.
3. Merger between two or more small companies.
4. Merger between a Holding Company and its Wholly-owned Subsidiary Company.

Small Companies:

Small Company” means a company other than a public company whose paid-up share capital is up to Rs. 4 crore and turnover is up to Rs. 40 crore.

The above provision shall Not apply to:

(a) A holding company is a subsidiary company.

(b) A company registered under Section 8.

(c) A company or body corporate governed by any special act.

Procedure for Fast Track Merger in Punjab:

In the fast track merger procedure, there are two types of companies, i.e., the transferor company and the transferee company.

Transferor company: A transferor company is the one that is amalgamated into the other company.

Transferee company: A transferee company, on the other hand, refers to the company into which a transferor company is amalgamated.

Steps Involved in a Fast Track Merger in Punjab:

The following steps are involved in the Fast Track Merger process:

A board meeting is convened to approve the following:

(a) To approve the Scheme of Merger

(b) Authorize a director or company secretary to make an application to the regional director.

(c) To fix the time, date, and place of the meeting of the shareholders.

(d) To appoint a valuer for taking a certificate for the fair value of a share under Section 247 of the Act.

(e) To approve the latest financial statement, auditor’s report and supplementary financial statements in case the last financial statement is more than 6 months before the date of the board meeting.

(f) A certificate from the statutory auditor that the accounting treatment for the proposed scheme is as per the accounting standards.

(g) To approve the Declaration of Solvency by the Directors.

The Fast Track Merger in Punjab scheme should have the following details:

The following steps are involved in the merger scheme:

(1) Names of the parties, companies involved, appointed date, and effective date.

(2) Share Exchange Ratio.

(3) Details of promoters, directors, and KMPs.

(4) Valuation Report.

(5) Details of capital or debt restructuring.

(6) Amount due to the unsecured creditors.

(7) Investigation or proceedings pending, if any, against the company.

(8) Disclosure of the effect of the merger on various KMPs and other directors and promoters, if applicable.

(9) Accounting treatment clause as per Accounting Standard 14.

(10) Clause relating to the conduct of business by the Transferor Company as a trustee for and on behalf of the Transferee.

(11) Treatment of employees, workers, and other contract workers.

(12) The authorized capital and consolidation of the same upon completion of the merger.

(13) Effect of Tax and its Consequences.

(14) Date of board meetings, meetings of members and creditors for approval and its validity.

(15) Dissolution of Transferor Company clause.

(16) Clause stating that the scheme is conditional and will be effective only after approval.

(17) Provisions for modification.

(18) Effect of non-receipt of approval of the scheme.

(19) Documents to be listed for inspection.

(20) Cost of Merger.

(21) Any other matter to be considered for merger.

(22) Any other matter to be considered for merger.

Notice in Form CAA-9:

Notice of the proposed scheme shall be sent to the ROC, the official liquidator, or persons affected by the scheme in form CAA-9.

The ROC & official liquidator may provide their objections and suggestions within 30 days from the date of the CAA-9.

Declaration of Solvency:

Both companies shall be required to file a declaration of solvency on Form CAA-10 before the meeting of shareholders & creditors.

Notice of the General Meeting:

The notice of the meeting of shareholders and creditors shall be accompanied by:

(a) The matter mentioned in Section 230(3).

(b) Declaration of solvency.

(c) A copy of the scheme.

General Meeting for Approval of the Scheme:

The company shall be required to conduct an extraordinary general meeting, which will consider the following matter:

(a) Declaration of solvency.

(b) Objections & suggestions received from ROC & OL.

(c) The approval of the scheme.

Approval of the Scheme:

The scheme must be approved by the following: shareholders and creditors.

(a) Shareholders: by at least 90% of the total number of shares.

(b) Creditors: a majority representing nine-tenths of the value of the creditors in the meeting or otherwise approved in writing.

File Copy of Approved Scheme:

The transferee company shall file a copy of the approved scheme along with a report of the result (Form no. CAA-11) of the meeting with the central government, ROC, and official liquidator within 7 days after the conclusion of the meeting.

Mode of Sending:

A copy of the scheme shall also be filed, along with Form No. CAA.11 with

(a) The registrar of companies in Form Number GNL-1.

(b) The official liquidator through hand delivery, registered post, or speed post.

Fast track merger in Punjab No objection or suggestion is received:

If there is no objection or suggestion received within 30 days of receipt, a copy of the scheme from ROC & OL and the CG are of the opinion that the scheme is in the public interest or in the interest of the creditor.

It may, within a period of 15 days after the expiry of said 30 days, issue a confirmation order of such a scheme of merger or amalgamation in Form No. CAA.12.

Provided that if the Central Government does not issue the confirmation order within a period of 60 days of its receipt, it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.

Fast track merger in Punjab Objections or suggestions are received:

Where there is a fast track merger in Punjab, objections or suggestions are received within a period of thirty days of receipt of a copy of the scheme from the Registrar of Companies, the Official Liquidator, or both by the Central Government:

(a) If such a fast track merger in Punjab raises objections or suggestions of the Registrar of Companies or Official Liquidator that are not sustainable and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, it may, within a period of 30 days after the expiry of the thirty days referred to above, issue a confirmation order of such a scheme of merger or amalgamation in Form No. CAA.12.

(b) If the Central Government is of the opinion, whether on the basis of such objections or otherwise, that the scheme is not in the public interest or in the interest of creditors, it may, within sixty days of the receipt of the scheme, file an application before the NCLT in Form No. CAA.13 stating the objections or opinion and requesting that the NCLT may consider the scheme under Section 232 of the Act.

(c) NOTE: If the CG does not issue a confirmation order under clause (a) or does not file any application under clause (b) within a period of sixty days of the receipt of the scheme it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.

Conformation Order(CAA-12):

The company shall be required to file a conformation order in Form number INC-28 with ROC within 30 days from the date of receipt of the conformation order.

External Government Website Link: MCA