Schemes of arrangement under Sections 230–232 enable mergers, demergers, amalgamations and capital restructuring with NCLT sanction. The process requires creditor and member approvals and regulatory clearances.
A scheme of arrangement under Sections 230–232 of the Companies Act 2013 is a court-supervised corporate restructuring that can effect mergers, demergers, amalgamations, capital reductions, compromise with creditors and any other arrangement between a company and its members or creditors. Unlike a contractual transaction, the scheme binds dissenting members and creditors once sanctioned by the NCLT — which is why the process includes mandatory class meetings, regulatory scrutiny and a fairness assessment by the tribunal.
AMLEGALS advises companies on scheme structuring, valuation, regulatory clearance strategy (Competition Commission, SEBI, RBI, sectoral regulators), class-meeting management, NCLT hearing representation and post-scheme implementation including stamp duty, tax and regulatory filings. The practice covers cross-border mergers under Rule 25A and fast-track mergers under Section 233.
Advising on the optimal restructuring structure — merger, demerger, slump sale or capital reduction — and drafting the scheme document.
Advising on share-exchange ratios, appointing valuers and defending valuations before the NCLT and dissenting stakeholders.
Coordinating with CCI, SEBI, RBI, stock exchanges and sectoral regulators for required approvals.
Convening and managing creditor and member class meetings with requisite quorum and voting thresholds.
Representing the applicant company at the NCLT sanction hearing and addressing objections from stakeholders and regulators.
Advising on post-sanction implementation including ROC filings, stamp duty, tax implications and transition.
A scheme of arrangement is a mechanism under Sections 230–232 of the Companies Act 2013 by which a company proposes a compromise or arrangement with its creditors or members (or any class of them). It can be used for mergers, demergers, amalgamations, capital reduction, compromise with creditors and corporate restructuring. The scheme binds all members and creditors of the relevant class once sanctioned by the NCLT.
The scheme requires: (a) approval of a majority in number representing three-fourths in value of each class of creditors and members, voted at separate class meetings; (b) sanction by the NCLT; and (c) regulatory clearances from CCI (if the combination thresholds are met), SEBI (for listed entities), RBI (for banking and NBFC companies) and sectoral regulators as applicable. The ROC, Official Liquidator and Regional Director are heard at the NCLT stage.
Section 233 provides a simplified merger route for: (a) mergers between a holding company and its wholly-owned subsidiary, (b) mergers between two or more small companies, and (c) such other classes of companies as may be prescribed. The fast-track merger is approved by the Central Government (Regional Director) instead of the NCLT, subject to member and creditor approval and objections.
Mergers and demergers undertaken through a scheme can qualify for tax-neutral treatment under Sections 47 and 2(19AA) of the Income Tax Act 1961 (corresponding provisions of the Income-tax Act 2025 apply from 1 April 2026), subject to specified conditions. Stamp duty is levied on the transfer of assets — the rate and applicability vary by state. GST implications arise on transfer of a going concern versus transfer of assets. The tax structuring must be embedded in the scheme from the drafting stage.
Yes. An NCLT sanction order can be appealed to the NCLAT and further to the Supreme Court. Grounds for challenge include non-compliance with the approval thresholds, failure to hold proper class meetings, unfair swap ratio, material non-disclosure and violation of regulatory requirements. Dissenting creditors or members who were outvoted can appeal on grounds of unfairness.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
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