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Scheme of Arrangement under Sections 230 to 232

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Service: End-to-end execution of a scheme of arrangement, merger, demerger or amalgamation, through the NCLT.

Route: Sections 230 to 232, with creditor and member approvals and NCLT sanction.

Covers: Drafting, valuation coordination, NCLT filings, meetings, sanction and ROC filings.

Fees: Quoted per deal, as size, structure and timeline drive the scope.

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Scheme of Arrangement: Overview and Quick Summary

📌 TL;DR - Scheme of Arrangement Services at a Glance

A scheme of arrangement under Sections 230 to 232 is the court-supervised route for a merger, demerger or amalgamation in India. The scheme is approved by a majority in number representing at least 75 percent in value of each class of members and creditors, and is sanctioned by the NCLT, after which it binds all stakeholders. The process runs through a first and a second motion before the NCLT.

Parameter	Detail
Governing Provision	Sections 230 to 232 with the Compromises Rules, 2016
Used for	Mergers, demergers, amalgamations and arrangements
Approval	Majority in number and 75 percent in value of each class
Authority	National Company Law Tribunal (NCLT)
Process	First motion to convene meetings, second motion to sanction
Fees	Quoted per deal (size, structure and timeline driven)
Timeline	Commonly several months, depending on the NCLT and objections

Scheme of arrangement services from Patron Accounting cover the drafting of the scheme, the coordination of the valuation and share exchange ratio, the NCLT filings and meetings, the statutory notices, the sanction petition and the ROC filings to give the scheme effect. It is a premium, deal-specific engagement. Our team has supported 10,000+ businesses since 2009.

For the strategic deal advisory, the valuation negotiation and the deal structuring, this scheme execution service connects to our M&A advisory work. A scheme is procedure-heavy and triggers follow-on corporate changes such as a change in name or a change in authorised capital, which we implement after sanction.

What Is a Scheme of Arrangement?

A scheme of arrangement is a court-supervised mechanism under Sections 230 to 232 of the Companies Act, 2013 that lets companies restructure, by merging entities, splitting an undertaking into a separate company, or reorganising capital or settling with creditors. It is sanctioned by the NCLT and then binds all stakeholders.

Unlike some jurisdictions where a merger can be done by board and shareholder resolutions alone, India requires judicial oversight by the NCLT. The scheme sets out the share exchange ratio, the appointed date, the effective date and the accounting treatment, and is the standard route for amalgamations and demergers.

Key Terms for Scheme of Arrangement:

Transferor company: The company whose undertaking or part of it is transferred under the scheme.
Transferee company: The company that receives the undertaking under the scheme.
Share exchange ratio: The ratio in which shares of the transferee are issued, set by a registered valuer.
Appointed date: The date from which the scheme is effective for accounting and transfer.
First and second motion: The application to convene meetings, then the petition to sanction the scheme.

Sections 230-232 NCLT Scheme

When Is a Scheme of Arrangement Used?

A scheme of arrangement is used whenever a restructuring needs the binding effect of an NCLT order across all stakeholders.

Merger or amalgamation: Combining two or more companies into one.
Demerger: Splitting an undertaking or division into a separate company, often for a carve-out or sale.
Capital reorganisation: Reorganising share capital as part of a broader arrangement.
Compromise with creditors: A binding compromise or arrangement with creditors or a class of them.
Group simplification: Consolidating subsidiaries or simplifying a group structure.

A scheme is one of several corporate change tools; for simpler changes see our private limited company compliance service.

Scheme Routes under the Act

The Act provides more than one route, and the right one depends on the parties.

Sections 230 to 232, NCLT route: The standard route for most mergers, demergers and arrangements, with NCLT sanction.
Section 233, fast-track: A simplified route for small companies and for holding and wholly-owned subsidiary mergers, approved by the Central Government rather than the NCLT.
Section 234, cross-border: For a merger involving a foreign company, subject to the prescribed conditions and approvals.

Our Scheme of Arrangement Services

Service	What We Do
Scheme Drafting	We draft the scheme, setting out the structure, the share exchange ratio, the appointed and effective dates and the accounting treatment.
Valuation and Approvals Coordination	We coordinate the registered valuer’s report, the auditor’s certificate on the accounting treatment, and the board approvals.
First Motion and Meetings	We file the first motion in Form NCLT-1, convene the creditor and member meetings as directed, or seek dispensation where eligible.
Statutory Notices	We serve the notices on the Central Government, Income Tax, RBI, SEBI, ROC, stock exchanges and the Official Liquidator, as applicable.
Second Motion and Sanction	We file the second motion petition, represent the scheme through the hearing and obtain the NCLT sanction order.
ROC Filings and Implementation	We file the sanction order with the ROC and support the post-scheme implementation, including any change in name, capital or object clause.

Our Process

Scheme of Arrangement Process: Step by Step

How Patron executes a scheme of arrangement under Sections 230 to 232, from drafting the scheme and obtaining the valuation through the two NCLT motions and the meetings to the sanction order and the ROC filing.

Step 1

Draft the Scheme

Prepare the scheme with the structure, share exchange ratio, appointed date, effective date and accounting treatment.

Exchange ratio Appointed date

Draft 01

Step 2

Board Approvals and Valuation

Obtain board approvals, the registered valuer’s report and the auditor’s certificate on the accounting treatment.

Valuer report Auditor cert

Valuation 02

Step 3

First Motion

File the first motion in Form NCLT-1 for directions to convene meetings, or seek dispensation where creditors agree.

Form NCLT-1 Convene meetings

1st Motion 03

Step 4

Hold Meetings

Hold the NCLT-directed meetings of members and creditors and obtain the requisite majority.

75% in value Each class

Meetings 04

Step 5

Notices to Authorities

Serve notice of the scheme on the Central Government, Income Tax, RBI, SEBI, ROC, stock exchanges and the Official Liquidator, as applicable.

CG + IT + RBI SEBI + ROC

Notices 05

Step 6

Second Motion and Sanction

File the second motion petition and obtain the NCLT sanction order on the scheme.

2nd motion NCLT sanction

Sanction 06

Step 7

File with ROC

File the sanction order with the ROC to give the scheme effect and complete the implementation.

Order filed Scheme effective

ROC 07

Documents Required for a Scheme of Arrangement

Draft scheme of arrangement, merger or demerger.
Registered valuer’s report and share exchange ratio.
Latest audited financials and the auditor’s report.
Board resolutions of the companies involved.
Lists of members and creditors with values.
Auditor’s certificate on the accounting treatment under Section 133.

Need the full checklist? We share a tailored scheme checklist after scoping your deal.

Common Scheme Challenges and Solutions

Challenge	Impact	How Patron Accounting Solves It
Getting the scheme drafting right	A vague or inconsistent scheme invites objections and delay. We draft it precisely, with clear dates, ratios and treatment.
Meetings and majority	Securing the 75 percent in value across classes takes planning. We manage the meetings and, where eligible, seek dispensation.
Authority objections	The Income Tax department or other authorities can raise observations. We address them through the process to keep the scheme on track.
Implementation after sanction	The order must be filed with the ROC and the changes implemented. We complete the filings and the follow-on steps.

Scheme of Arrangement Fees

Fee Component	Amount
Patron Accounting Professional Fees	Quoted per deal
What drives the fee	Number of companies, structure, valuation, classes of stakeholders and NCLT timeline
Valuer and counsel fees	Confirmed as part of the engagement scope
NCLT and MCA filing fees, objections handling	Confirmed as part of the engagement scope

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

A scheme of arrangement varies widely by the number of companies, the structure, the valuation, the classes of stakeholders and the NCLT timeline, so the fee is quoted after scoping the deal rather than as a fixed figure. The registered valuer’s fee, counsel’s fee for the NCLT hearings, NCLT and MCA filing fees, and any objections handling are confirmed as part of the engagement scope.

Get a free Scheme of Arrangement consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Scheme Timeline at a Glance

Stage	Estimated Timeline
Overall	A multi-month process, depending on the NCLT bench and objections
Drafting and valuation	Scheme drafted and the valuation and share exchange ratio obtained
First motion and meetings	NCLT directs the meetings, which are held to secure the requisite majority
Second motion and sanction	Sanction hearing and order, then the order filed with the ROC

A scheme of arrangement is a multi-month process. After the scheme is drafted and the valuation obtained, the first motion is filed and the NCLT directs the meetings, which are then held to secure the requisite majority. Statutory notices run in parallel, and the second motion petition follows, leading to the sanction hearing and order. The order is then filed with the ROC to give the scheme effect. The exact timeline depends on the NCLT bench and on any objections, and we plan the steps to keep momentum.

Key Benefits

Why Choose Professional Scheme Support

Scheme Drafted Precisely

The scheme is drafted precisely - with clear dates, ratios and accounting treatment - to reduce objections and delay at the NCLT.

Valuation and Approvals Coordinated

The registered valuer’s report, the auditor’s certificate and the board approvals are coordinated so the scheme stands up.

NCLT Filings and Notices Managed

The first and second motions, the NCLT-directed meetings and the statutory notices to the authorities are all managed.

Sanction and ROC Implementation

The sanction order is obtained and filed with the ROC, and the post-scheme implementation is completed.

Connected to Deal Advisory

The scheme execution connects to the strategic M&A advisory, valuation negotiation and deal structuring work.

Coordinated by a CA and CS Team

The scheme is coordinated end to end by a qualified Chartered Accountant and Company Secretary team.

Trusted by Businesses Across India

10,000+ Businesses Served | 4.9 Google Rating | 50,000+ Documents Filed | 15+ Years

"We merged two group companies to simplify our structure. Patron drafted the scheme, ran the NCLT process and got the sanction filed with the ROC." - Director, group holding company, Mumbai.

"We carved out a division through a demerger ahead of a strategic sale. Patron handled the scheme and the approvals end to end." - Founder, technology company, Pune.

Trusted by leading brands including Hyundai, Asian Paints and Bridgestone for accounting and compliance support.

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely.

Merger, Demerger and Fast-Track at a Glance

Factor	Merger or Amalgamation	Demerger	Fast-Track (Sec 233)
Purpose	Combine companies into one	Split an undertaking out	Simplified small or group merger
Route	Sections 230 to 232, NCLT	Sections 230 to 232, NCLT	Section 233, Central Government
Approval	75 percent in value, NCLT	75 percent in value, NCLT	90 percent members and creditors
Outcome	One merged entity	Two or more entities	Registered merger, no NCLT

Related Corporate and Implementation Services

A scheme triggers several follow-on corporate changes, and Patron handles the implementation and the wider compliance.

Change in Name of Company where the merged entity is renamed.
Change in Authorised Capital to absorb the merged capital.
Change in Object Clause where the business objects are revised.
Secretarial Audit for the governance review of a larger entity.
Company Closure as an alternative where a defunct entity is wound down instead of merged.

The strategic deal advisory, the valuation negotiation and the deal structuring are handled by our M&A advisory work, which this scheme execution service supports.

Legal and Compliance Framework

Provisions: Chapter XV of the Companies Act, 2013, Sections 230 to 240, with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, governs schemes of arrangement, where Section 230 deals with a compromise or arrangement, Section 231 with the NCLT’s power to supervise and enforce, and Section 232 specifically with mergers, amalgamations and demergers.

Approval and process: On an application in Form NCLT-1, the NCLT may order meetings of the members and creditors, and the scheme must be approved by a majority in number representing at least 75 percent in value of each class voting, after which the company files the second motion petition for sanction, with the NCLT able to dispense with creditor meetings where at least 90 percent of creditors in value agree by affidavit.

Disclosures and notices: The application discloses the latest financials, the auditor’s report, any pending investigation and any capital reduction, and notice of the scheme is served on the Central Government, the Income Tax authority, the RBI, SEBI, the ROC, the stock exchanges and the Official Liquidator, as applicable.

Effect and other routes: On sanction, the scheme binds all members, creditors and the companies, and the order is filed with the Registrar to give it effect, while Section 233 provides a fast-track route for small companies and holding-subsidiary mergers and Section 234 covers cross-border mergers.

Refer to the MCA portal for the forms and to Sections 230 to 232 on IndiaCode for the bare provisions.

What is a scheme of arrangement?

A scheme of arrangement is a court-supervised restructuring mechanism under Sections 230 to 232 of the Companies Act, 2013. It allows companies to merge, demerge, amalgamate, reorganise capital or compromise with creditors, with the scheme approved by the requisite majority of members and creditors and sanctioned by the NCLT, after which it becomes binding on all stakeholders by operation of law.

What is the difference between a merger and a demerger?

A merger or amalgamation combines two or more companies into a single entity, with the transferor company’s undertaking transferred to the transferee company. A demerger splits an undertaking or division out of a company into a separate company, often to carve out a business for a sale or to ring-fence it. Both are carried out through a scheme of arrangement under Sections 230 to 232 with NCLT sanction.

What approval is needed for a scheme of arrangement?

A scheme must be approved by a majority in number representing at least 75 percent in value of each class of members and of creditors who vote at the meetings directed by the NCLT. After this approval, the NCLT sanctions the scheme through the second motion. The Tribunal may dispense with a creditors’ meeting where at least 90 percent of creditors in value agree to the scheme by affidavit.

What is the role of the NCLT in a scheme?

The National Company Law Tribunal supervises the entire scheme. On the first motion, it orders and directs the meetings of members and creditors. After the meetings and the statutory notices, it hears the second motion petition and, if satisfied, sanctions the scheme by an order. Section 231 also empowers the NCLT to supervise the implementation and to give directions or modifications as needed.

What is the first motion and the second motion?

The first motion is the application to the NCLT in Form NCLT-1 seeking directions to convene the meetings of members and creditors, or a dispensation from those meetings. After the meetings are held and the requisite majority obtained, and notices are served on the authorities, the second motion is the petition to the NCLT to sanction the scheme. The sanction order is then filed with the Registrar of Companies.

How long does a scheme of arrangement take?

A scheme of arrangement is a multi-month process. The time depends on the complexity of the scheme, the number of companies and classes of stakeholders, the NCLT bench’s schedule, and whether any authority or stakeholder raises objections. The drafting and valuation, the two NCLT motions, the meetings and the statutory notices each take time, so realistic planning of the timeline is important.

Who must be notified of a scheme?

Notice of the proposed scheme must be served on the Central Government through the Regional Director, the Income Tax authority, and where applicable the Reserve Bank of India, SEBI, the Registrar of Companies, the stock exchanges for a listed company, and the Official Liquidator. These authorities may file representations, which the NCLT considers before sanctioning the scheme, so addressing their observations is part of the process.

Is there a faster route for small or group mergers?

Yes. Section 233 provides a fast-track merger route for small companies and for a merger between a holding company and its wholly-owned subsidiary. It is approved by the Central Government, through the Regional Director, rather than requiring a full NCLT scheme, subject to approval by 90 percent of members and creditors. Section 234 separately provides for cross-border mergers involving a foreign company.

Scheme of arrangement kya hota hai?

Scheme of arrangement ek NCLT se approve hone wala tarika hai jisse companies merger, demerger ya amalgamation karti hain, Sections 230 se 232 ke under.

Merger ke liye NCLT approval zaroori hai kya?

Haan, normal merger ya demerger ke liye NCLT ki sanction zaroori hai, jabki chhoti ya holding-subsidiary companies fast-track Section 233 use kar sakti hain.

Quick Answers

Used for? Mergers, demergers, amalgamations, arrangements.

Approval? 75 percent in value of each class, then NCLT.

Authority? The NCLT, two-motion process.

Fast-track? Section 233 for small or group mergers.

Why Get It Right

A scheme of arrangement is one of the most procedure-heavy corporate actions. A poorly drafted scheme, a missed majority, or unaddressed authority objections cause delays or even rejection at the NCLT, which can derail a deal timeline. Careful drafting, well-run meetings and proactive handling of the authorities keep the scheme moving to a clean sanction and a smooth implementation.

Scope your scheme - Call +91 945 945 6700 or WhatsApp us. We respond within 2 hours.

Plan Your Scheme of Arrangement with Patron Accounting

A scheme of arrangement under Sections 230 to 232 is the court-supervised route for mergers, demergers and amalgamations in India: draft the scheme, obtain the valuation and approvals, run the two NCLT motions and the meetings with the 75 percent majority, address the authorities, and file the sanction order with the ROC.

It is procedure-heavy and deal-specific, where professional handling makes the difference. Patron Accounting, with a qualified CA and CS team and offices in Pune, Mumbai, Delhi and Gurugram, executes your scheme end to end and connects it to the deal advisory.

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Scheme of Arrangement Support Across India

In-person and remote scheme of arrangement, merger and demerger support from our offices in Pune, Mumbai, Delhi and Gurugram.

Related Corporate and Implementation Services

Post-scheme corporate changes

Change in Name

India

Change Authorised Capital

India

Change in Object Clause

Content Created: 3 June 2026 | Last Updated: | Next Review: 4 September 2026 | Reviewed By: CA & CS Team, Patron Accounting LLP

This page is reviewed at least yearly and updated whenever Chapter XV (Sections 230 to 240), the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, the 75 percent in value test, the first and second motion process, the statutory-notice list, or the Section 233 fast-track and Section 234 cross-border routes change. Freshness Tier 1.

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