Chapter XV - Compromises, Arrangements and Amalgamations
Section 237
Section 237: power of Central Government to provide for amalgamation of companies in public interest
Section 237 allows the Central Government, where it is satisfied that it is essential in the public interest, to order two or more companies to amalgamate into a single company by an order notified in the Official Gazette, without a scheme approved by members and creditors.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where the Central Government is satisfied that it is essential in the public interest that two or more companies should amalgamate, the Central Government may, by order notified in the Official Gazette, provide for the amalgamation of those companies into a single company with such constitution, with such property, powers, rights, interests, authorities and privileges, and with such liabilities, duties and obligations, as may be specified in the order. (2) The order under sub-section (1) may also provide for the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company and such consequential, incidental and supplemental provisions as may, in the opinion of the Central Government, be necessary to give effect to the amalgamation. (3) Every member or creditor, including a debenture holder, of each of the transferor companies before the amalgamation shall have, as nearly as may be, the same interest in or rights against the transferee company as he had in the company of which he was originally a member or creditor, and in case the interest or rights of such member or creditor in or against the transferee company are less than his interest in or rights against the original company, he shall be entitled to compensation to that extent, which shall be assessed by such authority as may be prescribed and every such assessment shall be published in the Official Gazette, and the compensation so assessed shall be paid to the member or creditor concerned by the transferee company. (4) Any person aggrieved by any assessment of compensation made by the prescribed authority under sub-section (3) may, within a period of thirty days from the date of publication of such assessment in the Official Gazette, prefer an appeal to the Tribunal and thereupon the assessment of the compensation shall be made by the Tribunal. (5) No order shall be made under this section unless—(a) a copy of the proposed order has been sent in draft to each of the companies concerned; (b) the time for preferring an appeal under sub-section (4) has expired, or where any such appeal has been preferred, the appeal has been finally disposed off; and (c) the Central Government has considered, and made such modifications, if any, in the draft order as it may deem fit in the light of suggestions and objections which may be received by it from any such company within such period as the Central Government may fix in that behalf, not being less than two months from the date on which the copy aforesaid is received by that company, or from any class of shareholders therein, or from any creditors or any class of creditors thereof. (6) The copies of every order made under this section shall, as soon as may be after it has been made, be laid before each House of Parliament.
Introduction
Section 237 commenced on 15 December 2016 under S.O. 3677(E). The India Code text shows no amendment and matches the 2013 Gazette.
Key takeaways
Public interest test
The Central Government must be satisfied that amalgamation is essential in the public interest.
Rights preserved or compensated
Members and creditors keep, as nearly as may be, the same interest or rights, and are compensated if their position is reduced.
Appeal
A person aggrieved by the assessment of compensation may appeal to the Tribunal within thirty days of its publication in the Official Gazette.
Consultation first
A draft order goes to each company, and objections are considered within a period of not less than two months.
The order
Under sub-section (1), the Central Government may, by order notified in the Official Gazette, provide for amalgamation of the companies into a single company with the constitution, property, powers, rights, interests, authorities, privileges, liabilities, duties and obligations specified in the order. Under sub-section (2), the order may also continue pending legal proceedings by or against a transferor company and include consequential, incidental and supplemental provisions.
Members, creditors and compensation
Under sub-section (3), every member or creditor, including a debenture holder, of each transferor company has, as nearly as may be, the same interest in or rights against the transferee company as before. If the interest or rights are less, the person is entitled to compensation assessed by the prescribed authority, published in the Official Gazette, and paid by the transferee company.
Under sub-section (4), a person aggrieved by the assessment may appeal to the Tribunal within thirty days from its publication in the Official Gazette, and the Tribunal then makes the assessment.
Conditions before the order
Under sub-section (5), no order may be made unless (a) a draft has been sent to each company concerned, (b) the time for appeal under sub-section (4) has expired or any appeal has been finally disposed of, and (c) the Central Government has considered suggestions and objections from the companies, their shareholders or creditors, within a period it fixes of not less than two months from receipt of the draft, and made any modifications it thinks fit. Under sub-section (6), every order is laid before each House of Parliament.
Practical preparation
If your company receives a draft order, diarise the objection period stated in it; prepare objections and suggestions from the company, shareholder classes and creditors; compare each member’s and creditor’s position before and after; and diarise the thirty-day appeal window once compensation is published.
Procedure, forms, fees and timelines for applications under this provision are set out in rules made under the Act and in the Tribunal’s procedure; check the current text of those rules, and any exemption notification for your class of company, before relying on this guide.
Practical checklist
Do
- File objections within the period the Central Government fixes after receiving the draft order.
- Check the published assessment of compensation promptly so the thirty days for appeal are not lost.
Avoid
- Do not assume a member or creditor loses value without compensation; sub-section (3) provides for it.
Illustrative example
Hypothetical: merger of two utilities
The Central Government proposes to amalgamate two companies running a shared essential service.
Draft order
A draft is sent to each company, which circulates it to shareholders and creditors.
Objections
Stakeholders file suggestions and objections within the period fixed, not less than two months.
Compensation
A creditor whose rights are reduced receives compensation and may appeal the assessment to the Tribunal.
Outcome
- The final order is notified in the Official Gazette and laid before Parliament.
Glossary
- Transferee company
- The single company into which the companies are amalgamated.
- Prescribed authority
- The authority named in rules to assess compensation under sub-section (3).
Frequently asked questions
Do members have to approve a section 237 amalgamation?
The section does not require a members’ or creditors’ approval. It requires a draft order to be sent to each company and objections and suggestions to be considered before the order is made.
What if my rights are reduced?
You are entitled to compensation assessed by the prescribed authority, and you may appeal the assessment to the Tribunal within thirty days of its publication in the Official Gazette.
Need help applying this provision to your situation?
Contact BizeneedLast updated 12 October 2026