Case Details

Case Name: CP (CAA) No.21/BB/2025

Parties: Akamai India Networks Private Limited (Petitioner No.1/Transferee Company) and Linode Hosting India Private Limited (Petitioner No.2/Transferor Company)

Court/Authority: National Company Law Tribunal, Bengaluru Bench

Order Date: 20 May 2026

Period of Violation/Dispute: Scheme filed on 07 April 2025 with appointed date initially proposed as 01 April 2023, later modified to 01 April 2024

Parties Involved

Petitioners:

  • Akamai India Networks Private Limited (CIN: U72900KA2017FTC101689)
  • Linode Hosting India Private Limited (CIN: U74900KA2018PTC182586)

Regulatory Authorities:

  • Registrar of Companies (ROC), Karnataka
  • Regional Director (RD)
  • Official Liquidator, Bangalore
  • Income Tax Department
  • Reserve Bank of India (notified but did not respond)

Representatives:

  • For Petitioner Companies: Shri Christopher Edwin
  • For IT Department: Shri Ganesh R Ghale
  • For ROC: Shri Vinayaka S Pandit

Tribunal Members:

  • Shri Sunil Kumar Aggarwal, Hon'ble Member (Judicial)
  • Shri Radhakrishna Sreepada, Hon'ble Member (Technical)

Issues / Allegations / Violations

The petition sought sanction of the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013 with the following key issues raised by regulatory authorities:

ROC/RD Observations:

  • Appointed date of 01 April 2023 was ante-dated beyond one year requiring justification
  • Both companies were loss-making entities as per audited financial statements ending 31 March 2024
  • Undisputed statutory dues: Transferor Company - ₹14.97 million, Transferee Company - ₹7.76 lakhs
  • Disputed tax dues: Transferor Company - ₹300.89 million (Income Tax and GST), Transferee Company - ₹351.7 million (Income Tax and GST)
  • Transferee Company had outstanding MSME dues of ₹1.85 million as of 31 March 2023
  • Foreign exchange compliance issues with outstanding foreign currency payable of ₹11.12 million beyond permitted time
  • Related party transactions during last two years
  • Audit trail facility in accounting software not operational throughout year

Income Tax Department Observations:

  • Assessment proceedings pending for AY 2024-25
  • Penalty proceedings pending for AY 2018-19 and 2022-23
  • Appellate proceedings pending for AY 2018-19 and 2022-23
  • Outstanding tax demands: AY 2021-22 - ₹10,28,850; AY 2022-23 - ₹70,99,950
  • Questioned continuation of loss-making company in reverse merger structure

Findings & Observations

The Tribunal examined all regulatory reports and petitioner responses:

  • The Scheme was filed within one year of the original appointed date (03 July 2024 filing for 01 April 2023 appointed date)
  • Both companies have common directors and are part of the Akamai Technologies global group
  • Shareholding pattern: Linode LLC holds 99.99% in Transferor Company; Akamai Technologies Netherlands BV holds 99.99% in Transferee Company
  • The merger aims to simplify group structure and achieve operational synergies through shared infrastructure
  • Petitioner companies provided undertakings for all regulatory compliance requirements
  • No objections were received from any statutory authorities within the stipulated 30-day period
  • No complaints, prosecutions, or investigations pending against either company

Penalties / Settlements / Directions

The Tribunal approved the scheme with specific directions:

Share Exchange Ratio: 4.4141 equity shares of ₹10 each in Transferee Company for every 10 equity shares of ₹10 each held in Transferor Company

Financial Undertakings Accepted:

  • Transferee Company will settle all undisputed statutory dues of both companies (total ₹15.75 million)
  • Transferee Company will settle disputed tax dues as and when claims are crystallized (total ₹652.66 million)
  • MSME dues will be settled in accordance with MSME Act, 2006
  • Foreign exchange compliance will be ensured under FEMA/RBI regulations
  • Employee rights and ESOP/ESPS terms will be protected post-amalgamation
  • Books and records will be preserved as per Section 239 of Companies Act, 2013

Additional Directives:

  • Appointed date modified to 01 April 2024 instead of 01 April 2023
  • Transferee Company to pay differential fee on clubbing of authorized share capital
  • Transferor Company to surrender PAN and GSTIN within 8 weeks of order
  • Compliance with Section 170A of Income Tax Act, 1961 required
  • TDS compliance required on outgoing payments
  • Stamp duty to be paid based on assets transfer value

Corrective Actions & Future Obligations

Post-Merger Compliance Requirements:

  • Transferee Company must amend its object clause to include Transferor Company's business activities
  • All foreign investment compliances under FEMA must be completed
  • Audit trail functionality in accounting software must be made operational
  • Ongoing income tax proceedings will be continued by Transferee Company
  • All regulatory filings and e-forms must be submitted promptly
  • Records of Transferor Company must be preserved physically and electronically

Employee Protection: All employees of Transferor Company will be absorbed on terms no less favorable than existing terms

Final Ruling & Enforcement

The Tribunal sanctioned the Scheme of Amalgamation with the following final orders:

  • Scheme approved with appointed date of 01 April 2024
  • Scheme binding on all shareholders and creditors of both companies
  • Transferor Company stands dissolved without winding up
  • Certified copy of order to be delivered to ROC Karnataka within 30 days for registration
  • All undertakings given by petitioners are made binding and must be complied with
  • This order does not grant exemption from payment of stamp duty, taxes, or other charges
  • Authorities under Income Tax Act and Companies Act remain free to take appropriate action
  • The petition CP (CAA) No.21/BB/2025 is allowed and disposed of