Fast Track Merger Process for Start-up and Small Companies

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Mar 31, 2021

Fast Track Merger Process for Start-up and Small Companies

The MCA has by its Notification dated February 1, 2021, amended the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, to enable a fast track merger for startup companies. In this regard, a private company will be considered a ‘start-up company’ if: (i) upto a period of 10 years from its incorporation, the turnover of such company for any of the financial years has not exceeded Rs 100 crores (approx. US$ 13.27 million); and (ii) the company is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation. In case a private company is formed by splitting up or reconstruction of an existing business, it will not be considered a ‘startup’.

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