Board and Shareholder Approval

• The Board of Directors of both the subsidiary and the merging or parent company must approve the merger proposal through board resolutions.
  
• A draft Scheme of Amalgamation or Merger is prepared detailing the terms, share exchange ratio, and asset-liability transfer.
  
• Shareholders of each company must approve the scheme by passing a special resolution in a general meeting.
  
• Notices are sent to creditors and members along with an explanatory statement.
  
• Intra-group mergers (e.g., wholly owned subsidiary into parent) may enjoy simplified approval procedures.
  

Application to Tribunal (NCLT)

• Companies involved must jointly or separately file an application to the National Company Law Tribunal (NCLT) under Sections 230–232 of the Companies Act, 2013.
  
• The application must include the merger scheme, valuation report, auditor’s report, and other financial disclosures.
  
• NCLT may direct the holding of meetings of shareholders and creditors if required.
  
• In case of no objections and full compliance, the NCLT may waive the meeting requirement.
  
• Post hearing, NCLT issues an order approving or modifying the scheme.
  

Regulatory and Statutory Filings

• After NCLT approval, companies must file the order with the Registrar of Companies (ROC) in Form INC-28.
  
• The scheme becomes effective from the appointed date mentioned in the merger document.
  
• Intimations must be sent to SEBI (for listed entities), RBI (for foreign-owned companies), and other regulators if applicable.
  
• Updated Memorandum and Articles of Association may be filed if changes are involved.
  
• Stamp duty must be paid on the transfer of assets and undertaking, subject to state-specific laws.
  

Accounting and Legal Integration

• Post-merger, assets and liabilities of the subsidiary are transferred to the merging company as per the scheme.
  
• Financial statements must reflect the amalgamated position from the effective date.
  
• Share capital adjustments, intercompany balances, and reserves are consolidated or eliminated.
  
• Legal contracts, licenses, and approvals must be updated to reflect the merged entity’s name.
  
• Employees of the subsidiary are transferred to the merged entity without affecting continuity of service.
  

Tax and Compliance Considerations

• Tax neutrality is available under Section 2(1B) of the Income Tax Act for qualifying mergers.
  
• Losses and unabsorbed depreciation may be carried forward under Section 72A, subject to conditions.
  
• Companies must file tax returns disclosing the merger and seek necessary approvals if applicable.
  
• Transfer pricing implications must be assessed in cross-border mergers involving related parties.
  
• Post-merger compliance includes updated PAN, GST registrations, and statutory registers.