NCLT Chennai Clears Scheme For Merger Of TVS Investments With TVS Electronics

The National Company Law Tribunal at Chennai has recently approved a scheme filed by TVS group companies, sanctioning their amalgamation and permitting the merger of TVS Investments into TVS Electronics. The tribunal noted that the scheme was beneficial to the company and its shareholders and found no ground to withhold approval.

A bench of Judicial Member Sanjiv Jain and Technical Member Venkatraman Subramaniam noted that the companies had submitted all mandatory documents and statutory approvals.

The tribunal recorded, “After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the Petitioner Companies seems to be prima facie beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company.”

The scheme provides for the amalgamation of TVS Investments Private Limited into TVS Electronics Limited with April 1 2023 as the appointed date. Upon amalgamation, shareholders of TVS Investments will receive 1,11,60,093 fully paid-up equity shares of Rs. 10 each of TVS Electronics proportionate to their existing shareholdings.

The company's board approved the scheme on November 11, 2023, BSE granted approval on July 31, 2024 and NSE on August 20, 2024. The companies filed the first motion application on 7 January 2025 and the second motion petition on 13 April 2025.

The applicants said the amalgamation would streamline shareholdings, consolidate operations, reduce compliance burden and reflect the promoter group's direct commitment to the merged entity. They submitted that 99.24 percent of equity shareholders voted in favour of the scheme and confirmed that no proceedings were pending against either company except an income tax demand of about Rs 37 lakh against TVS Investments, which TVS Electronics would discharge after the merger.

The Regional Director objected to the ante dating of the appointed date on the ground that it went beyond the one year limit indicated in a 2019 circular of the Ministry of Corporate Affairs. The Official Liquidator raised concerns regarding valuation, commercial substance and a possible tax avoidance motive. The applicants filed replies addressing each point. The Income Tax Department stated in its report dated 21 May 2025 that it had no objection to the scheme.

Rejecting the Regional Director's objection, the tribunal said the delay in obtaining stock exchange approvals justified the appointed date chosen by the companies.

It observed, “The Transferee Company obtained the approval of its Board on 11.11.2023 and promptly applied for the approval of the stock exchanges on 02.12.2023. However, the approval was received only on 31.07.2024 from BSE and on 20.08.2024 from NSE. Hence, we find the ante dating of the Appointed Date to be completely justified and not harmful to public interest.”

Approving the scheme, the tribunal directed the companies to file a certified copy of the order and the amalgamation scheme before the Registrar of Companies within 30 days. The Registrar was directed to merge TVS Investments into TVS Electronics and dissolve TVS Investments without winding up under the Companies Act.