FAQs on Fast Track Merger U/s 233 of Companies Act, 2013
Q 1. What is the Wholly Owned Subsidiary Company?
Ans. It means a subsidiary company whose 100% shares are held by its holding company. The Transferor company needs to be an wholly owned subsidiary of the holding company as on appointed date of the scheme.
Q 2. Is Declaration of Solvency required from the Transferor Company?
Ans. Section 233 of Companies Act prescribes that it is to be given by both companies.
Q 3. What is the Appointed Date?
Ans. Appointed Date means the date from which the scheme shall come into force (specified in the scheme of merger).
Q 4. What is Effective Date?
Ans. Effective Date means the date when the amalgamation/merger is completed in all respects and the order has been filed with the Registrar of Companies.
Q 5. How Does the ROC determine the exact date of a company becoming a wholly owned subsidiary of another company?
Ans.A company can become a Wholly owned subsidiary through allotment of shares or through transfer of shares.
Q 6.What proofs need to be submitted to prove the holding and Wholly owned subsidiary relationship?
Ans.Filing of Forms MGT-4, MGT-5 and MGT-6.
Q 7. Can General Meeting of Members or Creditors be waive?
Ans. No waiver for conducting a general meeting for approval of the scheme of amalgamation
Q 8.Is there scope for amalgamating more than 2 companies in one scheme?
Ans.No scope for amalgamating more than 2 companies in 1 scheme.
Q 9. Whether Listed Companies can also opt for the Fast Track Merger?
Ans. Yes, Listed Companies that fulfils the criteria as mentioned in section 233(1) can also opt for Fast track mode.
Q 10. Can Class of Companies eligible to opt for Fast track merger, adopt traditional merger route for approval of merger?
Ans.Yes class of companies eligible to opt for Fast track merger may at its own discretion opt for traditional merger route as per provisions of section 233(14) of the Act and Rule 25(8) of Companies Rule.
Q 11. Can the appointed date of the scheme be changed after filing of CAA 11?
Ans. It may be changed through an affidavit from the directors of the Company, if allowed by the RD.
Q 12. Can Regional Director suggest changes in the scheme of merger?
Ans. RD cannot suggest changes in the scheme, this can be done by ROC and OL alone.
The wording used in the rules say “Confirmation Order”
If the shareholders, creditors, ROC, OL do not have any objection to the scheme, then the RD has to simply “Confirm” the scheme.
Q 13. How the documents and Forms to be provided to the Official Liquidator?
Ans. Documents and Forms to be provided to Official Liquidator to through hand delivery or by post.
Q 14.Is there any scope for Demerger?
Ans. Section 233 of the Companies Act, 2013 uses the words notwithstanding anything contained in Section 230 and 232 of Companies Act, 2013. Section 233 (12) gives a reference of the section being applicable to in respect of a scheme of compromise and arrangement or division or transfer of a company.
Q 15. Is Stamp Duty applicable on Fast Track Merger?
Ans. Stamp Duty is a state subject and its applicability is determined on two grounds:-
(a) State where Registered office of the company is situated
(b) Status of properties being transferred under the scheme.
Further it is only where property is involved and when Transferee intends to transfer the same in its name comes the question of registration and therefore, payment of duty rises at that stage. In Case where a property may not be situated in the state of passing of order on merger, the stamp schedule of relevant State has to be seen if duty is applicable on immovable property registration in that state where property is located.