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Air India-Vistara Merger Approved by NCLT

The National Company Law Tribunal (NCLT) has granted approval for the merger of Air India and Vistara, marking a significant step towards the formation of one of the world’s largest airline groups. This merger, announced in November 2022, will see Singapore Airlines holding a 25.1% stake in Air India, which is set to be completed by the end of this year.

Key Approvals and Observations

The NCLT observed that the scheme has already received necessary approvals from the shareholders and creditors of both airlines, along with endorsements from regulatory bodies such as the Competition Commission of India (CCI) and the Directorate General of Civil Aviation (DGCA). Notably, no substantial objections have been raised by relevant authorities, including the Income Tax department.

Binding Sanction and Dissolution

With the NCLT’s sanction, the “Composite Scheme of Arrangement” among the involved companies and their shareholders becomes binding. Following completion of the merger and associated formalities, the transferor company (Vistara) will dissolve without undergoing the winding-up process. This dissolution is subject to receiving necessary approvals, including Foreign Direct Investment (FDI) approval from Singapore Airlines and security clearances as per relevant Civil Aviation Regulations (CARs) within a nine-month timeframe.

Regulatory Timeline and Conditions

The proposed merger received conditional approval from Singapore’s competition regulator CCCS in March of this year, followed by approval from the CCI in September 2023, albeit subject to certain conditions. The timeline set forth by the NCLT underscores the need for FDI approval and security clearances, highlighting the regulatory diligence required for the successful completion of this significant corporate transaction.

Tata Group’s Stewardship of Air India

The merger comes under the purview of Tata Group, which assumed control of the financially struggling Air India in January 2022. This strategic move signifies Tata Group’s continued expansion and consolidation efforts in the aviation sector, positioning itself as a major player in the global airline industry.

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