X Ltd. acquired Y Ltd. under the scheme of merger sanctioned by the Tribunal, Y Ltd. ceases to exist. Consideration is discharged by way of issue of equity shares of X Ltd. to the shareholders of Y Ltd. in the ratio of 1

An amalgamation should be considered to be an amalgamation in the nature of merger when Shareholders holding not less than 90% of the face value of the equity shares of the transferor company (other than the equity shares already held therein, immediately before the amalgamation, by the transferee company or its subsidiaries or their nominees) become equity shareholders of the transferee company by virtue of the amalgamation. Even if we exclude the shares of Y Ltd. already held by X Ltd., consequent to the allotment of shares pursuant to merger, 90% criteria for amalgamation to be classified as merger is being met. Since 90% of the remaining shares i.e., 95% comes out to 85.5% shareholders. Thus, the threshold is being met. Hence the above case will qualify as merger.