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CS Professional · Corporate Restructuring, Valuation and Insolvency · Fast Track Mergers

Asha Textiles Ltd holds all the equity shares of its subsidiary, Asha Yarns Pvt Ltd, and the two companies wish to merge without going through the Tribunal process of full court-convened meetings. Under Section 233 of the Companies Act, 2013, which pair of companies is expressly eligible for the fast track route?

A holding company and its wholly-owned subsidiary can use the fast track route. Section 233(1) also covers small companies and prescribed classes. A partly owned subsidiary, common promoters or a supplier relationship do not qualify the companies for this simplified merger procedure.

  1. AA holding company and its wholly-owned subsidiary companyCorrect
  2. BA listed company and any unlisted company that it supplies
  3. CTwo companies under common promoters but with different registered offices
  4. DA holding company and a subsidiary in which it holds 51% of the shares

Explanation

Section 233(1) permits a scheme between two or more small companies, between a holding company and its wholly-owned subsidiary, or other prescribed classes. A 51% subsidiary is not wholly owned, and common promoters or a supply relationship do not create eligibility.

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