ABC Ltd. was incorporated on May 12, 1986, under the Indian Companies Act, having its registered office at Mumbai, Maharashtra. The present capital structure of the petitioner company is as follows: ₹ 1,000 crore Authori

In the present case reduction of share capital, demerger, acquisition, notice to Competition Commission of India (CCI) for crossing threshold of asset/turnover, depository receipts attracting Reserve Bank of India (RBI) /Foreign Exchange Management Act (FEMA) & SEBI (SAST) Regulations, 2011 alongwith other sector regulator specific compliance issues are involved. Here both companies i.e., transferor and transferee will have to comply provisions of section 230 to 232 of Companies Act, 2013, SEBI (SAST) Regulations 2011, FEMA, Competition Act, approval of sector regulators (if product L, M, N and O need specific compliance issues to be ensured). Hence, mere submission of copy of resolution to ROC, NCLT and publishing in newspaper about successful arrangement will not suffice. NCLT will reject such application. Merger or amalgamation of companies involves various issues including the regulatory approvals. These regulatory approvals are to be obtained not only from the sector in which the company is operating (for example in case of merger of two banks, RBI's approval is needed) but also from other departments like Income Tax, SEBI, ROC, etc. The companies are required to obtain following approvals in respect of the scheme of amalgamation: (i) Authorisation Pre-approval authorisation about appointment of intermediaries, advisors, etc. Approval of Valuation Report by Audit Committee. (ii) Approval of Board of Directors Approval of scheme of amalgamation by the Board of both the companies. Board resolution should, besides approving the scheme, authorise a Director/Company Secretary/ other officer to make application to Tribunal, to sign the application and other documents and to do everything necessary or expedient in connection therewith, including changes in the scheme. (iii) Approval of Shareholders/Creditors, etc. Members' and creditors' approval to the scheme of amalgamation is sine qua non for Tribunal's sanction. This approval is to be obtained at specially convened meetings held as per Tribunal's directions [Section 230(1)]. However, the Tribunal may dispense with meetings of members/creditors [Section 230(9)]. (iv) Approval of the Stock Exchanges A listed entity desirous of undertaking a scheme of arrangement or involved in a scheme of arrangement, shall file the draft scheme of arrangement, proposed to be filed before Tribunal with the stock exchange(s). (v) Approval of Financial Institutions The approval of the Financial Institutions, trustees to the debenture holders and banks, investment corporations would be required if the Company has borrowed funds either as term loans, working capital requirements and/ or have issued debentures to the public and have appointed any one of them as trustees to the debenture holders. (vi) Approval from the Land Holders If the land on which the factory is situated is the lease-hold land and the terms of the lease deed so specifies, the approval from the lessor will be needed. (vii) Approval of the Tribunal Both companies (amalgamating as well as amalgamated) involved in a scheme of compromise or arrangement or reconstruction or amalgamation is required to seek approval of the respective Tribunal for sanctioning the scheme. Every amalgamation, except those, which involve sick industrial companies, requires sanction of Tribunal which has jurisdiction over the State/area where the registered office of a company is situated. If transferor and transferee companies are under the jurisdiction of different Tribunals, separate approvals are necessary. The notice of every application filed with the Tribunal has to be given to the Central Government (Regional Director, having jurisdiction of the State concerned). (viii) Approval of Reserve Bank of India Where the scheme of amalgamation envisages issue of shares/cash option to Non-Resident Indians, the amalgamated company is required to obtain the permission of Reserve Bank of India subject to conditions prescribed under the Regulations issued by RBI. (ix) Approvals from Competition Commission of India (CCI) The provisions relating to regulation of combination as provided under Sections 5 and 6 of the Competition Act, 2002 would also be required to be complied with by companies, if applicable.