Corporate Restructuring

The NCLT approves mergers under Sections 230–232. Eligible fast-track mergers are confirmed by the Regional Director under Section 233.

Typically six to twelve months or more, depending on the bench’s schedule, objections and regulatory representations.

Yes. Tax neutrality depends on meeting the specific conditions in the income-tax law, so it should be reviewed together with tax advisors.

The Companies Act permits mergers between companies. Mergers involving LLPs are governed by Sections 60–62 of the LLP Act. A cross-structure merger requires careful legal structuring.

Only if the combination crosses the asset, turnover or deal-value thresholds under the Competition Act, 2002 and no exemption applies.

Set out the objective, then assess the legal routes, the tax effect and the approvals required, and then carry out due diligence.

Common forms are mergers and amalgamations, demergers, slump sales, conversions between entity types, capital reductions, buy-backs and share-capital reorganisation.

Typical goals are consolidating group entities, separating businesses for investors, simplifying ownership, improving tax and compliance efficiency, or preparing for a sale or fundraising.

Schemes under Sections 230–232 need NCLT sanction. Certain small-company and holding-subsidiary mergers can use the fast-track route, and some changes need only board and shareholder approval.

Employees of a transferor entity usually continue on terms no less favourable, as set out in the scheme or agreement. Gratuity, provident fund and labour-law implications should be planned in advance.

A slump sale is the transfer of an entire undertaking for a lump-sum consideration without assigning individual values to assets and liabilities, and it has its own tax treatment.

Where the company has secured or unsecured creditors, their rights are affected by a scheme and they may need to be heard. Loan agreements often require prior lender consent for restructuring.

A registered valuer determines fair value or share-exchange ratios, which the board and shareholders and the NCLT rely on, and which also affect tax and FEMA compliance.

The appointed date is the date from which the scheme takes effect for accounting and tax purposes, while the effective date is when the NCLT order is filed with the Registrar.

Yes, LLPs may merge with each other, or a company with an LLP in the circumstances the LLP Act and the Companies Act permit, and partnerships and proprietorships can convert into LLPs or companies.

Stamp duty on transfers of property and shares under a scheme depends on the state law and the transaction structure, and should be budgeted early.

Capital gains, carry-forward of losses, depreciation, GST on transfers, and the conditions that make a merger or demerger tax-neutral all need review before a structure is chosen.

An NCLT-based scheme often takes several months depending on the bench, the number of meetings and the objections received. Fast-track mergers are quicker.

The petition, scheme, valuation report, audited accounts, board resolutions, and statutory registers and notices form the usual bundle, together with affidavits and notices to authorities.

We study objectives and constraints, advise on the structure, prepare the scheme and resolutions, coordinate with valuers, tax and legal advisors, and manage filings through to the final order.