How to Request for Merger/Demerger of IEC? - Bizfoc

Overview 

IEC registration contains a 10-digit alphanumeric number that helps businesses to thrive in the global market. This registration helps to identify the businesses of goods and services globally. The merging/demerging of IEC registration is the part of the process for either requesting for merging IEC or demerging IEC. This happens on the event when a business willing to enter into the contract of merging the business to raise the bandwidth for their vertical effectively. 

Whether the user desires to merge their company with other companies to effectively expand networking to allow the management to concentrate on critical areas for generating maximum profit. So the Directorate General of Foreign Trade (DGFT) has given this option in the portal in order to manage the IEC account holder in such circumstances. If you’re also running a joint venture or planning to separate IEC holders. In this article, we will provide you complete insights on how to request for merger/demerger of IEC registration. 

What is the Merger/Demerger of IEC Registration?

Merger/Demerger of IEC registration refers to the process of combining multiple IEC into one IEC registration (in case when business consolidates) or splitting an IEC into different IEC registration (in case when business is divided). This alignment or separation of trading companies, on holding the IE Code, needs management of IEC registration to remain compliant in this condition. 

Why Business Requests for Mergers and Demerger?

Here is the reason why business request for merger or demerging the company along with their respective holder of IEC registration: 

Merging Multiple Companies 

1. Combining companies leads to spread market diversification within existing markets. This helps the companies to gain significant market share within an existing market. 
2. Merging with multiple companies lead to the emergence of technological advancement 
3. By leveraging larger purchasing power, it reduces costs for consolidating operations. 
4. By combining expertise of two companies that are performing outstanding in the market to create a more powerful entity with market reach. 

Demerging of Companies 

1. By separating non-core business units to allow the management to concentrate on the most profitable areas. 
2. This allows investors to simply separate the value and invest in different business units with distinct growth potential. 

Documents required for Demerger/Merger of IEC Registration

Here is the documents required for demerger/merger of IEC registration:

1. PAN Card Copies 
2. Digital Signature Certificates (DSC)
3. Copy of Memorandum of Association (MoA) and Article of Association (AoA)
4. Proof of Address 
5. PAN Card Copies 
6. Scheme of Amalgamation/Demerger 
7. Board resolutions 

Requirement for Merger/Demerger of IEC Registration

Here is some requirement for merger/demerger of IEC registration, which are as follows:

1. Valid Login Credentials of DGFT Portal (on registering to DGFT Portal)
2. IEC to be merger/demerged 
3. Users should have an active DSC which contains the details of the Firm / Aadhar for Proprietors or Members of the Firm. 

How to request for Merger/Demerger of IEC Registration?

Here is the step by step procedures for Merger/Demerger of IEC registration, which are as follows:

Step 1: Visit to DGFT Portal 

To request for merger/demerger of IEC registration, the user needs to visit the DGFT portal. If you’re new to this portal, you need to start by registering on the given portal. By generating OTP, you are able to access this portal without any complex procedures. By login into the portal with you need to fill valid credentials and proceed with your DGFT portal. 

Step 2: Click on My IEC

After login into the portal, you need to proceed by clicking on My IEC. If the user is unable to find out ‘My IEC’ button, you can also navigate from the main Menu by clicking on Services→ Importer Exporter Code. 

Step 3: Select the Request for Merger/Demerger tab 

On proceeding with the IEC code, the user needs to click on the request for Demerger/Merger tab. There are a total of 9 tabs in the portal and the user will select the button whatever they want to manage their IEC for trading goods internationally. 

Step 4: Select the type of Demerger/ Merger

On clicking on the Request for Merger/Demerger tab, the user screen appears with the pop-up on the screen about an option. This option is for the user whether interested in merging the IEC or demerging IEC. This option should be carefully selected by the user and should be aware about the term in which they are willing to consider. 

Step 5: Enter the user’s IEC Number 

On proceeding with either of the options, you will enter the IEC number of other IEC, you want to merge/demerge. This selects the Order date of court and End date of IEC. by entering the request with the reason for the request, and then click on submit button. 

Step 6: Submit the Digital Signature Certificate (DSC) 

On submitting the request for IEC, the user will submit the Digital Signature Certificate (DSC) on the pop up request to submit the DSC. Then proceed with DSC details and then the user will finally put in the request for demerging/merging the IEC registration.

Step 7: Acknowledgement will popup from file number 

Once the user has filled up with signature details and the user will be able to see the Acknowledgement pop-up with the file number indicates that your application is succeeded successfully. 

Conclusion 

To establish effective vertical in the global market, most business relied to merge or demerge their IEC account holder in order to manage the trading by staying complaint to legal laws and regulations. For instance, If the user is joint venture and are planning to separate their entity from existing ones, they may need to request for demerging IEC. IEC acts as the unique identifier for custom clearance and regulatory compliance with Directorate General of Foreign import export (DGFT) on trading activities. For getting professional assistance to request a profile to an existing IEC, you will get to request your IEC easily and hassle free. 

Frequently Asked Questions

1) Why would a business need to merge/demerge?

Businesses need to merge after acquisitions, partnerships, or reconstructing while demerger is required when a company splits into multiple entities. 

2) Is there any fee associated with requesting a Demerger/Merging business?

No, there is no fee associated with requesting a Demerger/Merging business for IEC registration. 

3) Can I link multiple businesses to a single IEC in case of dividing the business?

No, once a company has splitted into multiple entities, you can’t link multiple businesses to a single IEC. 

4) Will IEC number changes after a merger or demerger? 

Yes, the IEC number changes after a merger or demerging of the business entity.