Listed companies on M&A road may get to skip NCLT

Move to speed up mergers, reduce burden on company law court benches

- Neha Joshi & Anirudh Laskar

The Centre may consider eliminating mandatory approval from the company law court in the merger and demerger of local listed firms, two people aware of the discussions said, over eight years after it allowed the leeway for certain types of companies. The move could reduce the burden on the National Company Law Tribunal (NCLT) benches and speed up the process, potentially reshaping the country's mergers and acquisitions (M&A) landscape.

"Multiple ministries are discussing ways to expedite amalgamations, particularly for listed companies. They are also considering whether approval requirements from the NCLT should be included in this process," one of the two people cited above said on the condition of anonymity.

In her budget speech on Saturday, finance minister Nirmala Sitharaman said the government aims to streamline India's M&A process, making it faster and more efficient.

An email sent to the ministry of corporate affairs remained unanswered.

To be sure, the government in December 2016 allowed fast-track mergers between a holding company and its wholly owned subsidiaries, two or more small companies, two or more startup companies, or a startup company and a small company. This allowed mergers to proceed with approvals from Centre and the MCA's regional director unless public interest or interest of creditors is involved. Prior to this, all kinds of mergers required NCLT approval.