Section 233 of the Companies Act, 2013, A conundrum?

[2021] 133 taxmann.com 29 (Article)

In light of the recent changes in the Indian economy, the instances of corporate restructuring have amplified. The authors in this write up have made an attempt to analyse the intricacies of one such restructuring, viz. fast-track merger1 provided under section 233 of the Companies Act, 2013 (“Act”).

Section 233 of the Act entails the concept offast-track merger procedure which may be opted by a defined set of companies. The said Section has its own benefits which makes it a lucrative approach for the entities to undergo this route.

What is a fast-track merger?

Fast track merger as the name suggests, is an alternate and swifter route to restructure companies, however, not every kind of entity can undergo the said route. The following entities are eligible to undergo this method –

(a) Two or more small companies;

(b) Holding and its wholly owned subsidiary;

(c) Two or more start-up companies and

(d) One or more start-up company with one or more small company.

The process is a respite from the lengthy approach laid in Section 230-232 of the Act, viz, the NCLT route.

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