NCLT Chandigarh Sanctions Cross-Border Amalgamation of Pine Labs Singapore with Pine Labs India Under Ss. 230-232 & 234 Companies Act 2013, Appointed Date Set as Order Date Subject to Singapore Law and RBI Approvals - 2025-05-24

NCLT Chandigarh Approves Pine Labs' Cross-Border Amalgamation Scheme

Chandigarh, India - The National Company Law Tribunal (NCLT), Chandigarh Bench, presided over by Hon’ble Mr. Harnam Singh Thakur (Member Judicial) and Hon’ble Mr. Ashish Verma (Member Technical), has sanctioned the Scheme of Amalgamation involving Pine Labs Private Limited (India) and Pine Labs Limited (Singapore). The order, delivered on April 9, 2025, paves the way for the Singaporean entity (Transferor Company) to merge with its Indian counterpart (Transferee Company), subject to certain conditions including approvals under Singaporean law.

The petition, C.P.(CAA) - 43/2024, was filed under Sections 230-232 and 234 of the Companies Act, 2013, marking a significant step in the cross-border restructuring of the prominent fintech player.

Background of the Amalgamation

Pine Labs Private Limited, the Indian Transferee Company, sought the NCLT's approval for the amalgamation with Pine Labs Limited , its Singapore-based Transferor Company. The rationale for the scheme, detailed in a previous first motion order dated August 12, 2024, aims to consolidate the entities. The current order pertains to the second motion petition for final sanction.

The NCLT noted that the "Appointed Date" as per the Scheme was defined as the "Effective Date" (when all conditions are met). However, in its operative directions, the Tribunal clarified that for specific consequences like transfer of employees and tax liabilities, the "Appointed Date" would be the date of its order (April 9, 2025), contingent upon the scheme becoming fully effective.

Regulatory Scrutiny and Clearances

The proposed amalgamation underwent scrutiny from various regulatory bodies:

• Regional Director (RD) and Registrar of Companies (RoC): Initial observations included a typographical error in the Scheme regarding the RoC's jurisdiction, pending provident fund dues (Rs. 14 lakhs), clarification on shareholding structure (Transferor holds 99.89% in Transferee, not wholly owned), and compliance with share capital alteration provisions. Pine Labs Private Limited provided undertakings and clarifications, stating the PF dues were due to employee UAN-Aadhaar linking issues and would be resolved. They also committed to complying with share capital alteration requirements post-merger. Subsequently, the RD confirmed no objections to the Scheme.

• Income Tax Department: The department raised no adverse observations. The Transferee Company undertook to comply with the Income Tax Act, 1961, and confirmed that all liabilities of the Transferor Company, including tax liabilities, would be transferred to the Transferee Company.

• Official Liquidator (OL): The OL stated no specific objections, noting the Transferor Company is incorporated in Singapore and thus outside its direct jurisdiction concerning its affairs.

• Reserve Bank of India (RBI): The RBI, being the sectoral regulator for Pine Labs Private Limited (a payment system operator), initially required approvals under Press Note 3 (2020 Series). After these were obtained, the RBI, vide a letter dated January 9, 2025, conveyed "no objection" to the proposed amalgamation, subject to compliance with certain conditions post-NCLT sanction. The Transferee Company undertook to comply with these RBI conditions.

The Tribunal also noted that notices were duly published and no objections were received from the general public or other stakeholders. A certificate from the statutory auditor confirmed the accounting treatment proposed in the Scheme aligns with Indian Accounting Standards.

NCLT's Sanction and Key Directives

After hearing the counsel for the Petitioner Company and perusing the records, the NCLT sanctioned the Scheme of Amalgamation, subject to several conditions:

Compliance with Laws: The Petitioner Company must comply with the Foreign Exchange Management Act, 1999, the Reserve Bank of India Act, 1934, and other relevant laws.

Singapore Approval : The sanction is crucially dependent on the approval of the merger of the Transferor Company in accordance with the Singapore Companies Act and other relevant Singaporean laws. The NCLT order will only be effective after such approval.

Filing and Further Approvals: Within 30 days of receiving the order, Pine Labs Private Limited must file a certified copy with the Registrar of Companies. It must also obtain the aforementioned Singaporean merger approval and any final RBI approvals for the scheme, and submit these to the RoC.

Transfer of Assets and Liabilities: Upon the scheme becoming effective post Singapore and RBI approvals, all properties, rights, liabilities, and duties of the Transferor Company will transfer to the Transferee Company.

Employee Transfer: Employees of the Transferor Company will become employees of the Transferee Company from the Appointed Date (date of NCLT order), on terms no less favorable.

Tax Liabilities: All tax liabilities and pending proceedings of the Transferor Company will transfer to the Transferee Company. The Income Tax Department retains recourse for recovery.

Statutory Dues: The Transferee Company is directed to clear all pending statutory dues after exhausting appellate remedies.

Legal Fees: A sum of Rs. 1,00,000 to be deposited towards the legal fees of the Regional Director.

The Tribunal clarified that its order does not grant exemption from any statutory payments like stamp duty or taxes, nor does it affect the tax treatment under the Income Tax Act, 1961. Furthermore, the sanction will not impede any action for deficiencies or violations committed under any law.

Implications of the Order

The NCLT's approval is a significant milestone for Pine Labs, allowing it to streamline its corporate structure through this cross-border amalgamation. The "Appointed Date" being set as the date of the NCLT order for operational transfers (once all other conditions are met) provides clarity for the transition. The final consummation of the merger now hinges on securing the necessary approvals in Singapore and fulfilling the conditions stipulated by the RBI and the NCLT.

The Company Petition CP(CAA) No.43/Chd/Hry/2024 was accordingly allowed and disposed of.