By The National Company Law Tribunal (NCLT) has approved the initial phase of the merger scheme between Reliance Industries (RIL) and Walt Disney’s India branch, marking the first significant milestone in a complex series of regulatory approvals necessary for the deal to come to fruition. Legal experts emphasize that while the NCLT’s acceptance is crucial, it is merely the beginning of a multifaceted process.
The NCLT has authorized the companies to convene a stakeholder meeting, requiring 75% of votes in favor to advance the merger further. Recently, Walt Disney announced its expectation to finalize the merger with RIL in the first half of 2025.
Industry experts highlight the procedural steps involved in mergers, starting with the stakeholder meeting. “For calling and holding this meeting, an application (colloquially called ‘First Motion Petition’) is filed before NCLT. So, NCLT has passed its order in this First Motion Petition giving directions on the calling of the meeting of the stakeholders,” explained Shashank Agarwal, Advocate, Delhi High Court, noting that it would be inaccurate to state that the NCLT has fully admitted the merger.
Following stakeholder approval with a 75% majority, the entities must file a ‘Second Motion Petition’ with NCLT for final approval. “At the stage of final nod of approval under the Second Motion Petition, NCLT would again invite objections from the public at large, the government departments like ROC, Income Tax Department, Competition Commission of India, etc.,” Agarwal elaborated.
Experts stress that the NCLT’s approval for the stakeholders’ meeting is a critical step, setting the process in motion. “The admission of the RIL-Disney merger by the National Company Law Tribunal (NCLT) is a significant step in the merger process,” said Advocate Alay Razvi, Partner, Accord Juris LLP. He added that subsequent steps include obtaining approvals from regulatory bodies such as SEBI, the Competition Commission of India (CCI), and stock exchanges.
These regulatory approvals are essential to ensure compliance with securities laws and to assess the merger for any anti-competitive practices. “After all regulatory and shareholder approvals are obtained, the final merger scheme is submitted back to the NCLT for its final sanction,” Razvi noted. “Once the NCLT provides the final approval, the companies can proceed to implement the merger, involving the actual amalgamation of assets, liabilities, operations, and possibly integration of corporate cultures and business processes.”
The timeline for these approvals can extend over several months, as each regulatory body has its own review processes. The entire process, from initial approval to final implementation, can span six months to over a year, depending on the complexity of the merger and the speed of regulatory approvals. Shareholder meetings and approvals typically take two to three months, while obtaining the final sanction from NCLT may take approximately two months.
NCLT’s review includes ensuring compliance with legal requirements and the fairness of the merger scheme to all stakeholders. “NCLT verifies that the merger scheme is fair and transparent to all stakeholders, including shareholders, creditors, and employees, and ensures there is no adverse effect on minority shareholders,” Razvi explained. The tribunal also scrutinizes valuation reports and the proposed share exchange ratio, ensuring they are fair and reasonable, and considers whether the merger promotes public interest, economic growth, competition, and efficiency.
Advocate Vidhan Vyas, Founder of Vyas Legal, added, “Once the NCLT approves the merger, the notices for the merger will be sent to tax authorities for their comments.” He emphasized that if all necessary approvals are received without objections, the process should not take excessive time. However, any stakeholder objections could prolong the process significantly.
In February this year, Mukesh Ambani-owned Reliance Industries, Viacom18 Media, and Walt Disney Corporation entered into an agreement to form a joint venture that would merge the television and digital streaming businesses of Viacom18 and Star India. This merger, once fully approved, is expected to significantly impact the media landscape in India.
