Companies Act 2013 Section 232: Merger and Amalgamation (2026)

Explainer · Company Law · NCLT

Updated for 2026 · Claw Editorial

Section 232 of the Companies Act, 2013 is the main provision for a merger or amalgamation of companies in India. It applies when a compromise or arrangement under Section 230 is proposed for the merger of two or more companies, or for a reconstruction that involves the transfer of an undertaking from one company to another. Under Section 232, the National Company Law Tribunal (NCLT) can sanction the scheme and, by its order, transfer the property, assets and liabilities of the transferor company to the transferee company. This explainer sets out what Section 232 covers, how it works with Section 230, and what the Tribunal can order. Last verified October 2026.

01What Section 232 covers

The marginal note to Section 232 is "Merger and amalgamation of companies". It applies where an application under Section 230 is made and the scheme is for the merger or amalgamation of two or more companies, or for a reconstruction involving the transfer of the whole or part of the undertaking, property or liabilities of one company, the transferor, to another, the transferee.

A demerger, where a part of a company is hived off, is also carried out as a scheme under Sections 230 and 232.

02How it works with Section 230

Section 232 does not stand alone. It uses the meeting and sanction machinery of Section 230. When the scheme is for a merger or amalgamation, the NCLT may order meetings of the creditors and members of each company, and the same double majority applies: a majority in number representing three-fourths in value, present and voting.

So the route is: Section 230 supplies the process of calling meetings, taking the vote and sanctioning the scheme, and Section 232 adds the specific rules for mergers and amalgamations. The application is made by both the transferor and the transferee companies. For the base provision, see Section 230 on compromise and arrangement.

03What the scheme and the report show

Before the meetings, the companies must circulate the scheme along with supporting material, so that creditors and members can take an informed decision. This includes:

• the draft scheme of merger or amalgamation adopted by the boards;
• a confirmation that a copy of the scheme has been filed with the Registrar;
• a report of the experts on the valuation, including the share exchange ratio;
• a report from each company's directors explaining the effect of the scheme on shareholders, key managerial personnel, promoters and non-promoter members; and
• the latest financial position and auditor's report of each company.

These disclosures are the heart of the fairness test. If the share exchange ratio or the valuation is not properly explained, members and the regulators can object.

04What the NCLT order can do

When the NCLT sanctions a scheme under Section 232, its order can provide for a range of consequences needed to carry the merger through, such as:

The order can also deal with accounting treatment, so that the accounts of the transferee company conform to the applicable accounting standards.

05After sanction: filing and effect

Once the scheme is sanctioned, a certified copy of the NCLT order is filed with the Registrar within the time set in the section. The scheme then takes effect from the appointed date fixed in it. From that point, the transferor company's business, assets and liabilities are treated as the transferee company's.

Each company must also file a statement with the Registrar every year, until the scheme is fully implemented, confirming that the scheme is being carried out in accordance with the Tribunal's order.

06Section 232 and the fast-track route

Not every merger needs the full Section 232 process. Section 233 provides a faster, non-tribunal route for certain mergers, such as a merger between two or more small companies, or between a holding company and its wholly owned subsidiary. That route is approved by the Central Government, through the Regional Director, rather than the NCLT, and it overrides Sections 230 to 232 for those specific cases.

If a merger does not fall within the narrow fast-track categories, it goes through Sections 230 and 232. To see how the NCLT and the appellate tribunal have sanctioned or sent back schemes on similar facts, see case search across Indian courts.

07Where Claw fits

Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.

Merger schemes turn on how the NCLT and the National Company Law Appellate Tribunal have treated valuation, share exchange ratios, objections and regulator representations. Claw lets you search more than 30 crore judgments and orders, with Supreme Court rulings from 1950 and High Court rulings from 1990, in under 5 seconds, so you can find how similar schemes under Section 232 were sanctioned or refused. You can also track a live merger petition, with its orders and hearings, by company or advocate name across 9,102 courts, benches and forums.

Claw does not use the documents you upload to train its AI models. Create a free Claw account to research Section 232 schemes and to follow a pending matter. To search the wider body of law, see case search across Indian courts.

08Sources and further reading

• Ministry of Corporate Affairs (Companies Act, 2013 and rules): mca.gov.in
• India Code (bare text of the Companies Act, 2013): indiacode.nic.in
• National Company Law Tribunal: nclt.gov.in
• Claw: clawlaw.in

This explainer is general information, not legal advice. The law changes through amendments and judgments, so check the current text and take advice from counsel before you act.

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