NCLT Chennai Directs Meetings For California Burrito Merger With Burrito Restaurants
The National Company Law Tribunal (NCLT) at Chennai recently allowed an application in connection with the proposed amalgamation of California Burrito, a Singapore-incorporated Mexican food chain, with Burrito Restaurants Private Limited.
It directed Burrito Restaurants to convene separate meetings of its equity shareholders, preference shareholders and unsecured creditors to consider the scheme.
A bench comprising Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam passed the order.
California Burrito is incorporated in Singapore, while Burrito Restaurants is incorporated in India. Under the proposed scheme, California Burrito is the company being merged into Burrito Restaurants.
The Singapore company will also undertake a parallel merger process there. The order records that California Burrito proposed to seek approval for the scheme from the High Court of Singapore under Singapore's company law.
The proposed transaction is an inbound cross-border merger, meaning a foreign company is proposed to merge into an Indian company. Such a merger is governed by Indian company law, the rules dealing with cross-border mergers and foreign exchange regulations.
According to the scheme, the merger is intended to simplify the group's corporate and shareholding structure by reducing the number of legal entities. It also aims to create a more streamlined platform for business growth and make it easier to raise funds from Indian and international investors.
The companies also expect the amalgamation to reduce duplicate administrative functions, managerial costs and compliance and reporting obligations.
Once the scheme takes effect, shareholders of California Burrito will receive shares in Burrito Restaurants under a share exchange ratio. For every ordinary share held in California Burrito, the shareholder will receive five point one one seven four three equity shares in Burrito Restaurants.
Similarly, for every Series A compulsorily convertible preference share held in California Burrito, the shareholder will receive five point one one seven four three Series B compulsorily convertible preference shares in Burrito Restaurants.
The tribunal directed Burrito Restaurants to convene the meetings on October 16, 2026. The company has 27 equity shareholders, 17 preference shareholders, and 23 unsecured creditors.
It also prescribed the quorum, or minimum number of participants required for each meeting to proceed. The tribunal appointed a Chairperson to oversee the meetings and a scrutiner to supervise the voting process.
Burrito Restaurants was directed to send individual notices to the concerned shareholders and creditors at least 30 days before the meetings. Each notice must be accompanied by the proposed scheme, an explanatory statement, and other required documents.
The company must also publish advertisements about the meetings in newspapers.
Further, the tribunal directed Burrito Restaurants to notify the concerned Regional Director of the Ministry of Corporate Affairs, the Registrar of Companies at Chennai, the Reserve Bank of India, the Income Tax Authorities and other sectoral regulators whose functions may have a significant bearing on the scheme.
Accordingly, the tribunal allowed the application.
For Applicants: Advocate Inbaraju