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

Sunrise Textiles Pvt Ltd, a wholly-owned subsidiary of Kaveri Industries Ltd, is to be merged into its holding company. The boards want to avoid a full NCLT hearing at the first stage. Which route does the Companies Act, 2013 make available to them?

A holding company and its wholly-owned subsidiary can use the fast track route under section 233. The scheme is approved by members and creditors and filed with the Central Government, Registrar and Official Liquidator, so no initial Tribunal hearing is needed.

  1. ASection 233 scheme, filed with the Central Government, Registrar and Official Liquidator without a first-stage Tribunal hearingCorrect
  2. BOnly a section 232 scheme, because holding-subsidiary mergers always need Tribunal sanction first
  3. CA section 234 scheme, because the subsidiary is wholly owned
  4. DA scheme registered by the Registrar alone, with no approval by members or creditors

Explanation

Section 233 applies to a merger between a holding company and its wholly-owned subsidiary, and to small companies. The scheme is approved by members and creditors and filed with the Central Government, Registrar and Official Liquidator, not first heard by the Tribunal. Section 234 deals with foreign companies, so it is wrong here.

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