A group restructuring often involves more than two companies. A single scheme may provide for the amalgamation of several transferor companies into one transferee, the demerger of one company into several resulting companies, or a combination of amalgamation and demerger across a group. Section 232 expressly contemplates the division of an undertaking among two or more companies, each of which may be an existing company or a new company. The NCLT has sanctioned schemes involving six transferor companies merging into a single transferee, and joint second motion petitions filed by three companies.
The Joint Petition Mechanism
Where the scheme involves multiple companies, the companies may file a joint petition before the NCLT. The joint petition is a single application that covers all the companies, and it is filed before the Bench having jurisdiction over the transferee company or, where the companies are in different jurisdictions, before the Bench determined by the NCLT’s practice. The joint petition reduces the duplication of pleadings and ensures that the scheme is considered as a single transaction.
The NCLT Allahabad has considered a joint second motion petition filed by multiple petitioner companies under Sections 230 and 232, and the Tribunal’s practice is to hear the companies together where the scheme is composite.
The Classification of Companies
The scheme must identify each company and its role: the transferor, the transferee, the resulting company, or the demerged company. Where a company is both a transferor and a transferee in different parts of the scheme, the scheme must clearly set out the sequence of the transactions and the appointed date for each. The classification determines the meetings that must be convened and the approvals that must be obtained.
The Meetings and the Voting
Each company must convene the meetings of its members and creditors, and each class must approve the scheme by the requisite majority. The meetings may be held separately or jointly, depending on the NCLT’s directions. The chairperson’s report must cover each meeting, and the report must reconcile the votes cast in each class.
The Appointed Date and the Effective Date
A composite scheme may have different appointed dates for different components. The scheme must specify the appointed date for each transfer, and it must ensure that the appointed date is consistent with the accounting treatment and the tax position. The effective date is the date on which the certified copy of the NCLT order is filed with the ROC, and it applies to the scheme as a whole.
A multiple-company scheme is technically demanding. The coordination of the meetings, the chairperson’s reports, the statutory approvals, and the filings requires a project management approach, and a defect in one component can delay the entire scheme.
Call to Action
Anuj Desai & Associates advises companies on NCLT schemes involving multiple transferor or transferee companies—from the joint petition and the classification of companies to the meetings, the appointed dates, and the post-sanction filings. If you are planning a group restructuring, we can help you coordinate the multiple components.
📧 office@anujdesaiassociates.com
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