What is a scheme of arrangement?
What is a scheme of arrangement? It is a court-approved way for a company to restructure its relationship with its shareholders or creditors, and it is the standard legal route for mergers, demergers, and amalgamations in India. A scheme of arrangement runs under Sections 230 to 232 of the Companies Act, 2013, and it becomes binding only after the National Company Law Tribunal (NCLT) sanctions it. It lets a company reorganise capital, combine with another company, or split off a business, once the required majorities and the tribunal agree. Source: Companies Act, 2013.
Definition
A scheme of arrangement
is a court-approved compromise or arrangement between a company and its shareholders or creditors, used for mergers, demergers, and restructurings. It runs under Sections 230 to 232 of the Companies Act, 2013, and takes effect only after the NCLT sanctions it. Source: Companies Act, 2013.
How does a scheme of arrangement get approved?
The process moves through defined stages. The company proposes the scheme, the NCLT convenes meetings of the affected classes of members and creditors, those classes vote, and the tribunal then decides whether to sanction it. The voting bar is specific: a scheme needs a majority in number representing three-fourths in value of each class present and voting. Source: Companies Act, 2013, Sections 230 to 232.
Three-fourths in value
Approval threshold for each class of members or creditors, alongside a majority in number
Source: Companies Act, 2013, Sections 230 to 232
What extra steps apply to a listed company?
A listed company faces a SEBI layer before the NCLT ever sees the scheme. Under SEBI LODR Regulation 37, the company must file the draft scheme with the stock exchanges and obtain a no-objection certificate first. SEBI also requires the scheme to be approved by public (non-promoter) shareholders through e-voting in specified cases, so a promoter-driven restructuring cannot bypass minority shareholders. Only after clearing these steps can the company file with the NCLT. Source: SEBI LODR Regulations.
Where does the public trail show up?
Each stage generates a disclosure to the exchanges: the draft scheme, the exchange no-objection, the voting outcomes, and the final NCLT order. A completed merger or demerger then reshapes the shareholding pattern, and control changes may interact with the SAST open offer rules and related party transaction disclosures.
So a scheme of arrangement is a court-sanctioned restructuring with defined voting and disclosure gates, not a private deal. Flock reads the public disclosures behind corporate actions and keeps each one dated and sourced. What any of it means for your own decision is your call to make.
Frequently asked questions
What is a scheme of arrangement?
A scheme of arrangement is a court-approved compromise or arrangement between a company and its shareholders or creditors, used for mergers, demergers, and restructurings. It runs under Sections 230 to 232 of the Companies Act, 2013, and needs approval from the National Company Law Tribunal. Source: Companies Act, 2013.
What majority is needed to approve a scheme of arrangement?
A scheme must be approved by a majority in number representing three-fourths in value of the creditors or members of each class present and voting at the meeting convened by the tribunal. Source: Companies Act, 2013, Sections 230 to 232.
Do listed companies need SEBI approval for a scheme?
Yes. Under SEBI LODR Regulation 37, a listed company must file the draft scheme with the stock exchanges and obtain a no-objection certificate before filing it with the NCLT. SEBI also requires approval by public shareholders through e-voting in specified cases. Source: SEBI LODR Regulations.
How is a scheme of arrangement disclosed?
A listed company discloses the draft scheme, the exchange no-objection, shareholder and creditor voting results, and the final NCLT order to the exchanges. This leaves a dated public trail at each stage. Source: SEBI LODR, NCLT.
Flock tracks these filings, sourced, dated, and linked back to the original. See what smart-money entities disclosed, without the guesswork about what it means.
Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.