NCLT New Delhi Allows First Motion In CDIL–CSPL Demerger Scheme, Orders Creditors' Meeting

On 14 May, the New Delhi Bench of the National Company Law Tribunal (NCLT) passed its first motion order in the joint application filed by Continental Device India Pvt Ltd (CDIL), the demerged company, and CDIL Semiconductors Pvt Ltd (CSPL), the resultant company.

Judicial Member Bachu Venkat Balaram Das and Technical Member Ravindra Chaturvedi allowed the application and issued directions for processing the proposed scheme of arrangement.

CDIL, incorporated in 1964, manufactures semiconductor silicon chips, devices, electronics assemblies, and provides electronics manufacturing services (EMS). CSPL, incorporated in 2024, focuses on semiconductors, electronic components, and related raw materials.

The companies stated that CDIL operates semiconductor and EMS businesses serving different markets. They also said the demerger will separate these verticals to enable focused operations and added that the restructuring will streamline the group structure and improve administrative efficiency. The boards of both companies approved the scheme on 1 September 2025, with an appointed date of 1 April 2025.

Under the scheme, CSPL will issue 67,61,750 equity shares of Rs 10 each to CDIL shareholders in exchange for 43,00,000 equity shares of Rs 10 each held in CDIL. The valuation report fixed the exchange ratio at 1,572.5 CSPL shares for every 1,000 CDIL shares.

CDIL has nine equity shareholders, all of whom filed consent affidavits. It has no secured creditors and 355 unsecured creditors. CSPL has four equity shareholders, all of whom consented. It has no secured creditors and 11 unsecured creditors with dues of Rs 18.29 lakh, which it discharged by 31 March 2025.

The companies stated that the scheme will not affect the rights of members or creditors and will benefit both entities through operational efficiency and independent expansion.

The Income Tax Department reported an outstanding demand of Rs 60.06 lakh against CDIL and noted pending penalty proceedings under Section 271(1)(c) for Assessment Year 2016 17. It clarified that tax proceedings will continue independently and reserved its rights under the Income Tax Act 1961.

The NCLT allowed the application after reviewing the record. It dispensed with meetings of equity shareholders and secured creditors of both companies and unsecured creditors of CSPL based on consent and discharge of dues. It directed CDIL to convene a meeting of its 355 unsecured creditors through video conferencing.

It fixed a quorum of 75 percent in value under Section 230(6) and appointed Advocate S.P. Chawla as Chairperson, PCS Priyank Kukreja as Vice Chairperson, and PCS Rimpi Jain as Scrutinizer, along with prescribed fees.

For Applicants: Advocates Varun Jain and Abhay Singh