NHL commits to no-less-favourable clinical staff transfer

Narayana Hrudayalaya Limited (NHL) says employees assigned to the clinical services undertaking will transfer on the Effective Date with uninterrupted service and terms no less favourable than before, under Clause 5.1 of the Scheme. Clause 5.2 also requires accumulated provident, gratuity, superannuation and other fund balances to move to corresponding NHL funds.

What employment protections will NHL provide to transferred staff?

NHL says every employee of Petitioner Company No. 1 engaged in the Demerged Undertaking will become an NHL employee from the Effective Date. Clause 5.1 provides that the transferred employees will receive terms and conditions no less favourable than those on which they were engaged before the transfer, with no interruption in service.

The commitment applies to employees engaged in the clinical services undertaking rather than to every employee of Petitioner Company No. 1. The filing says the demerged company has two undertakings: the Demerged Undertaking that will transfer to NHL and the Remaining Undertaking, comprising assets and liabilities that will remain with the demerged company.

NHL presented the undertaking in response to observation 13 of the Regional Director report. It says Clause 5 adequately safeguards affected employees and that it will abide by the clause and protect their interests once the Scheme becomes effective.

The filing does not state the number of staff assigned to the clinical services undertaking, their locations, grades or pay structures. It also does not specify the Effective Date, so the disclosed protection is a contractual commitment under Clause 5.1 rather than a dated employee-transfer schedule.

Which employee fund balances will move to NHL?

NHL says accumulated balances in the provident fund, gratuity fund, superannuation fund and any other fund of transferred employees will be moved to its corresponding funds under Clause 5.2. This covers balances built up before the Effective Date, not solely contributions that may arise after the transfer.

Provident, gratuity and superannuation funds are each explicitly named in Clause 5.2. The additional reference to any other fund broadens the stated transfer mechanism, although the filing does not identify further funds or disclose the value of any accumulated employee-benefit balances.

The Scheme specifies that balances will move to corresponding NHL funds. It does not describe the administrative sequence for the transfer, set a completion deadline after the Effective Date, or state whether employees must complete individual documentation for the movement of balances.

The employee-fund provisions form part of a demerger between NHL and its wholly owned subsidiary. The filing says NHL owns 100% of Petitioner Company No. 1, meaning no consideration shares are required for the transfer and vesting of the Demerged Undertaking under Clause 7 of Part II of the Scheme.

Does NHL have employee share options affected by the Scheme?

No, NHL says it has no employee stock option plan, employee stock purchase plan or other employee equity incentive scheme in operation as of the filing date. It says prior Employee Stock Option Plans, known as ESOPs, were fully implemented, executed and closed in accordance with their respective terms.

NHL further says there are no outstanding grants, vesting obligations, exercise rights, conversion rights, allotments, claims or other obligations under an ESOP. On that basis, it says no ESOP holder or beneficiary rights are affected by, or require consideration under, the Scheme.

The filing distinguishes this point from the staff-transfer protections in Clause 5. The absence of outstanding employee equity rights concerns NHL's incentive arrangements, while uninterrupted service and the transfer of retirement-fund balances apply to employees attached to the Demerged Undertaking.

NHL also describes the transaction as a demerger rather than an amalgamation or merger. It says NHL will continue as a listed entity after the Scheme, while the clinical services undertaking will move from its wholly owned subsidiary into NHL.

What approvals has the NHL demerger received?

The petitioners say the Scheme received the requisite majority approvals at meetings convened through video conferencing on 2 April 2026. Those meetings followed the Tribunal's order of 13 February 2026 in Company Application No. CAA 50/BB/2023.

For NHL, the meetings involved equity shareholders, secured creditors and unsecured creditors. For Petitioner Company No. 1, secured-creditor and unsecured-creditor meetings were held, and the filing says the requisite majority approved the Scheme at each meeting.

The filing identifies The Hongkong and Shanghai Banking Corporation Limited as the sole secured creditor of Petitioner Company No. 1. It says the creditor approved the Scheme, and that its charge relates to the Demerged Undertaking and will move to NHL after Tribunal sanction.

NHL says it will file the necessary forms with the Registrar of Companies in relation to that charge following sanction. The document does not state that the Tribunal has already sanctioned the Scheme, and it treats the employee transfer, charge movement and other implementation actions as taking place after sanction.

What obligations will NHL have after the Scheme takes effect?

NHL says it will preserve books and papers of Petitioner Company No. 1 relating to the Demerged Undertaking in accordance with Section 239 of the Companies Act, 2013. It also says the accounting treatment in Clause 8 complies with applicable accounting standards, including Indian Accounting Standard 103 on Business Combinations.

On statutory liabilities, the petitioners say undisputed dues of Petitioner Company No. 1 totalling Rs 169.75 lakh have been discharged. They say Rs 25.80 crore cited in the Regional Director report for NHL was disputed income-tax dues pending before tax authorities, rather than undisputed statutory dues.

NHL undertakes to settle disputed tax dues when they crystallise in accordance with law. The Income Tax Department, in a report filed on 6 October 2026, asked the assessee to comply strictly with Section 170A of the Income Tax Act, 1961.

After sanction, NHL says it will continue and contest any ongoing income-tax proceedings relating to the transferred undertaking and settle demands that crystallise. It has also undertaken that foreign-exchange transactions will remain on an arm's-length basis in the ordinary course and comply with applicable Foreign Exchange Management Act and Reserve Bank of India requirements.

Conclusion

The disclosed Scheme gives employees of the clinical services undertaking two specified protections: transfer to NHL without a break in service and employment terms no less favourable than before. It also provides for accumulated balances in provident, gratuity, superannuation and other funds to move to corresponding NHL funds, while the filing identifies no outstanding NHL employee equity rights requiring adjustment.

The next event to watch is Tribunal sanction, because the Effective Date and employee transfer remain conditional on the Scheme becoming effective. Following sanction, NHL says it will complete charge-related filings, preserve relevant records, handle transferred undertaking tax proceedings and settle tax demands when they crystallise under applicable law.