NCLT Chennai approves Amalgamation of Indian LLP with a Company

The Chennai Bench of the National Company Law Tribunal (NCLT) recently approved a scheme of amalgamation between an Indian Limited Liability Partnership (LLP) and an Indian private limited company. The Companies Act, 2013 and the LLP Act, 2008 do not contain any express provisions which provide for such cross-entity amalgamation. However, the NCLT held that the intent of these legislations is to facilitate ‘ease of doing business’ and to ‘create a desirable business atmosphere’, and hence it would be wrong to presume that a merger of an  Indian LLP with an Indian company is prohibited.

Order of the NCLT

The NCLT held that under section 394(4)(b) of the Companies Act, 1956 an LLP (included in the definition of ‘body corporate’) could be a transferor company in a scheme of  arrangement.

The NCLT noted that similar provisions under section 234 of the Companies Act, 2013 are not prescribed. The NCLT held it as a case of casus omissus because the  Companies Act, 1956 categorically allowed a transferor to be a body corporate (including an LLP).

The NCLT further observed that the Companies Act, 2013 allows under section 234 of the Companies Act, 2013 a foreign  company to merge with a company registered under the Companies Act, 2013  and vice versa. Foreign company is inter alia defined to include a foreign LLP.

The NCLT thus held that if the intention of the lawmakers is to permit a foreign  LLP to merge with an Indian company, then it would be incorrect to presume that  the merger of an Indian LLP with a company is prohibited in the absence of an  express statutory bar.