Merger of companies

2026 CLD 583 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 279, 280, 281, 282, 283 & 285Scheme of ArrangementsMerger of companiesCourt, duty ofPetitioner companies filed petition for approval of scheme of arrangements

Held: None of the stakeholders, shareholders of petitioner companies or other interested parties raised any objection to the Scheme

Subject to the conditions contained in NOCs issued by secured creditors, the Scheme would take effect in accordance with S. 282 of Companies Act, 2017

With the requisite majority of shareholders what is in favour of merger cannot be withheld unless it is shown that the same is unfair and unreasonable or against the national interest

Before granting sanction, the Court's role is not to reassess commercial merits but to ensure that the scheme is fair, reasonable, lawful, and consistent with public policy

Any arrangement that is illegal, unconscionable, or unfair cannot be sanctioned

Court's jurisdiction is supervisory and protective, rather than appellate

Court's task while sanctioning a scheme of arrangement is limited to watching over the regulatory and legal compliances being properly carried out for which SECP takes lead in its assistance to the Court

All statutory benchmarks and formalities were accomplished as required under Companies Act, 2017 and enabling rules

Scheme was reinforced by requisite majority and Chairman's report confirmed its compliance with statutory obligations

Proposed Scheme was fair, reasonable and commercially sound

There was no material to suggest that the Scheme was against public interest or any law

High Court sanctioned the Scheme of Arrangement between the petitioner companies

Petition was allowed in circumstances.

2025 CLD 587 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss.4, 5, 282(5) & PreambleStamp Act (II of 1899), S.27-A & Schedule IConstitution of Pakistan, Art. 143Intra Court AppealInconsistency in Federal and Provincial lawsMerger of companiesTransfer of assetsStamp duty, charging of

Appellant / company was aggrieved of charging of stamp duty on transfer of assets as a result of merger of two companies under the order of High Court

Validity

Objective to enact Companies Act, 2017 was to protect interests of shareholders, creditors, stakeholders and general public by inculcating principles of good governance and safeguarding minority interests in corporate entities and providing alternate mechanism for expeditious resolution of corporate disputes as well as matters connected thereto, as was mentioned in its preamble, read with the provisions of Ss. 4 & 5 of Companies Act, 2017

Hinderance by way of imposing stamp duty and other taxes would take away companies law jurisdiction from High Court to other Provinces

Conflict of law is created only when the two, i.e. the Federation and the Province, simultaneously have authority and in such circumstances, Federal Law would prevail

Provisions of Ss. 4 & 282(5) of Companies Act, 2017 were part of Federal Law, therefore, it prevailed over the provision of Provincial Law, i.e. S. 27-A of Stamp Act, 1899

High Court directed Chief Secretary of Province of the Punjab to file a detailed report on or before the next date, explaining progress made in the meeting to resolve the matter

High Court further directed that if matter would not be resolved despite efforts of the Chief Secretary of Province of the Punjab, then the same would be decided on its own merits, after discussing legal anthropology of relevant provisions of law, i.e. the Companies Act, 2017 and Stamp Act, 1899

High Court granted interim injunction in favour of appellant / company, since vires of the judgment passed by Judge in Chambers of High Court, in case titled Jadeed Feeds Industries (Pvt.) Limited v. Board of Revenue, Punjab through Chief Inspector of Stamps and others, reported as 2024 CLD 1570 was under challenge and balance of convenience for grant of interim relief also tilted in favour of appellant / company

Interim injunction was allowed accordingly.

2024 CLD 1570 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 279, 280, 281 & 282Stamp Act (II of 1899), S. 3 & First Schedule, Art. 27-A [as inserted by Punjab Finance Act, 2008]Constitution of Pakistan, Art. 199Constitutional petitionStamp duty, charging ofMerger of companies

Petitioner / company after approval of Scheme of Merger, was aggrieved of transfer of assets of merged companies being subjected to payment of stamp duty / mutation fee at the time of mutation or registration of merger of companies

Validity

In terms of S. 3 of Stamp Act, 1899, every "instrument" becomes "chargeable" with stamp duty of the amount indicated in First Schedule to Stamp Act, 1899 unless exempted

Provision of Art. 27-A of First Schedule to Stamp Act, 1899, which was previously not part of the Schedule but was inserted through Punjab Finance Act, 2008, brought the decree, rule of Court or an order of Court based on mutual consent of parties in cases involving transfer of an immovable property including sale, exchange, gift or mortgage, declaring or conferring a right in or title to an immovable property within ambit of an instrument chargeable to stamp duty

Order sanctioning merger of company is an "instrument" for all intents and purposes in the light of Stamp Act, 1899

Stamp duty is a provincial subject and in view of the scheme of distribution of legislative powers between Federation and Provinces as ordained in Art. 142(d) of the Constitution, the overriding effect of provisions of S. 282 (5) of Companies Act, 2017, or exemption from payment of stamp duty with respect to transfers under Scheme of Mergers is limited to the extent of Islamabad Capital Territory

Through merger, assets and liabilities of companies previously existing, stood transferred in the name of petitioner / company and fell within the ambit of Art. 27-A of First Schedule to Stamp Act, 1899

High Court declined to interfere in the matter

Constitutional petition was dismissed in circumstances.

2023 CLD 652 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 279, 280, 281 & 282Merger of companiesObject, purpose and scopePetitioner companies sought approval of Scheme of their mergerValidity

Approach was channelized to ascertain (i) whether statutory requirements were complied with and (ii) to determine whether the scheme as a whole had been arrived at by the majority, bona fide and the interest of whole body of shareholders in whose interest the majority purported to act, and (iii) whether scheme was such that fair and reasonable shareholder would consider it to be for the benefit of the company for himself

No objection from any quarter had come forward while all requisite formalities had been fulfilled

Wise group of businessmen had taken decision considering all its pros and cons and while taking such decision there were chances of success and failure but then while questioning such decision the bona fide was the real litmus test

Businessman takes decisions foreseeing the future aspect whereas the Court can only see if all 4 legal formalities have been fulfilled and that the scheme is neither unjust nor unfair or against the national interest

Court cannot challenge wisdom of a decision of businessman as by doing that the Court would be overriding the wisdom of a businessman and their prerogative

Report of Chartered Accountants was also very material who were engaged for calculating the swap ratio in respect of envisaged scheme of Amalgamation/Merger

High Court approved the scheme of Merger as there was no impediment

Petition was allowed, in circumstances.

2023 CLD 1266 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

Ss. 3, 11 & 31Merger of companiesPost-merger risksDeterminationPetitioners/companies applied for permission of their merger

Held, that there could not be any lessening of competition as both the groups had decisive influence over both the Merger Parties

Both the companies were being managed by common Chief Executive Officer, having same brandings and common distribution network

There was dependency of one party's operations on other party's assets and finances as well as profit sharing by both the parties on its production

Product lines of NP and CAN were being offered by two separate companies, ultimate controlling groups of the entities were same, therefore, AHG and FG were the sole producers of NP and CAN fertilizers and both the groups had decisive influence over the operation of Merger Parties

In post-merger scenario the Merger Parties consolidated their operation on papers in the form of surviving entity (FFCL) and post-merger risk of elimination of competitive constraints did not arise

Competition law was concerned with behaviour of an undertaking and conduct between undertakings that would ordinarily pursue an economic aim that was separate from that of its competitors (and would thereby have been in competition with each other) which was not the case in instant matter

Proposed transaction and consummated transaction were authorized under S. 31(1)(d)(i) of Competition Act, 2010

Competition Commission disposed of proceedings under S. 11(12) of Competition Act, 2010

Merger was allowed accordingly.

2022 CLD 1032 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 279, 280, 281, 282, 283 & 285Merger of companiesScheme of arrangementApproval ofPrinciplePetitioner companies sought their merger with approval of scheme of arrangements filed by themValidity

To question merger it was to be seen from perception that a wise group of businessmen had taken a decision considering all its pros and cons

While taking such decision there were chances of success and failure but then while questioning such decision bona fide was the real litmus test

Businessmen could take decision foreseeing future aspect

Court could only see that all legal formalities were fulfilled and that the scheme was neither unjust nor unfair or against national interest

Wisdom of decision of businessmen could not be challenged as by doing that Court would be overriding such wisdom which was their prerogative

Report of Chartered Accounts was very material who were engaged for calculating swap ratio in respect of envisaged scheme of arrangement

High Court declined to interfere in scheme of arrangement filed by petitioner companies

Petition was allowed accordingly.

2016 CLD 1344 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

Ss. 2(1)(k) & 11Merger of companies'Relevant market'Meaning and Scope

In terms of S. 2(1)(k) of Competition Act, 2010, 'relevant market' means the market to be determined by the Commission with reference to a product market and a geographic market

In the context of the assessment of a merger, the basic purpose of market definition is to identify in a systematic way the immediate and prospective competitive constraints that would be faced by the merging parties and others in the relevant market.

2013 CLD 397 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 94, 284(2), 287 & 288Merger of companiesScheme of arrangementApprovalCourt, powers ofPetitioners filed application for approval of scheme of arrangements for merger of companiesValidity

While exercising powers of Company Judge, correct approach was to ascertain whether statutory requirements had been complied with and to determine whether scheme of arrangement as a whole had been arrived at by majority shareholders and in actual fact it was for the benefit and in the interest of whole body of shareholders

Company Judge was to see whether scheme as such was fair and reasonable and shareholders had considered the scheme for benefit of companies and for themselves

Scheme of arrangement was manifestly reasonable and none of the creditors and/or members of petitioner companies had opposed the petition

Scheme of arrangement was apparently in the interest of members and seemed without prejudice to the rights of creditors

Filing/delivering of certified copy of order of sanctioning of the scheme before Registrar of Companies in terms of S.287(3) of Companies Ordinance, 1984, rendered requirement of notice in terms of S.94 of Companies Ordinance, 1984, irrelevant and unnecessary as filing of certified copy of the order sanctioning the scheme itself was notice

Court, under S.287 of Companies Ordinance, 1984, was invested with power to sanction/approve not only scheme of arrangements but also direct increase/enhancement in authorized share capital of a company

Petition was allowed accordingly.