NCLT Approves Air India And Vistara Merger

The National Company Law Tribunal in Chandigarh, on Wednesday, approved the merger between Air India and Vistara. 

According to information from the companies, the shareholding pattern of Air India Ltd., after the merger, will be as follows: Tata Sons Pvt. will hold 73.8%, Singapore Airlines Ltd. will hold 25.1%, and SBICAP Trustee Co. will hold 1.52%.

The tribunal directed that after the merger's effective date, Talace and Vistara will dissolve without winding up. All benefits, entitlements, and obligations of the merged companies will transfer to Air India. Employees of the dissolved companies will continue their service under Air India, maintaining their current terms and benefits. Contracts and liabilities will also transfer to Air India, which will continue any pending legal proceedings.

The companies that came before the tribunal for the merger included  Talace Pvt. (Transferor Company 1), the holding company of Air India; Tata SIA Airlines Ltd. (Transferor Company 2), operating as Vistara; and Air India Ltd. (Transferee Company).

The merger plan included reorganising Air India's share capital, combining Talace and Tata SIA with Air India, and issuing new shares to Singapore Airlines, a shareholder in Vistara.

On July 21, 2023, the NCLT allowed the meetings for the secured and unsecured creditors of Vistara, the unsecured creditors of Air India, and the preference shareholders of both Talace and Air India. Interestingly, the tribunal waived the need for meetings with the equity shareholders of the three companies.

Subsequently, the companies filed a second motion petition on Sept. 26, 2023, and obtained near unanimous approval from their creditors. The scheme received 100% approval from Vistara's secured creditors, 99.79% from its unsecured creditors, and 99.99% from Air India's secured creditors.

The companies also issued communications to the Income Tax Department, the Competition Commission of India, the Ministry of Civil Aviation, and others. The tribunal observed that there were no objections.

The tribunal then said that the merger scheme must comply with all statutory requirements and financial obligations. It clarified that the order does not exempt the companies from paying taxes, stamp duty, or other statutory dues, and does not affect the tax treatment of transactions under the Income Tax Act.

The merged entity must complete all merger-related formalities, including obtaining foreign direct investment approval and necessary security clearances, within nine months from the order date.