2000 (12) TMI 849 - HC - Companies Law

Summary

Issues:
1. Approval of scheme of amalgamation by both transferor and transferee companies.
2. Shareholders' approval for the proposed amalgamation scheme.
3. Creditor's approval and transfer of liabilities to the transferee company.
4. Compliance with Companies Act, 1956 regarding authorized share capital and investments.
5. Official Liquidator's report and public interest.

Issue 1:
The transferor-company and transferee-company, with similar business objectives, approved a scheme of amalgamation believing it would benefit both companies, shareholders, and creditors. The scheme aimed at enhancing the amalgamated company's financial position, capital structure, and operational efficiency. The board of directors of both companies passed resolutions in favor of the amalgamation, ensuring a seamless transfer of employees and creditors from the transferor to the transferee company.

Issue 2:
The equity shareholders of both companies approved the amalgamation scheme in separate meetings chaired by advocates appointed by the Court. The majority of shareholders voted in favor of the scheme, constituting a significant portion of the issued share capital. The absence of issued preferential shares from the transferor-company and the subsequent resolution for amalgamation were duly noted and considered during the approval process.

Issue 3:
Both transferor and transferee companies disclosed their respective creditors, with the scheme ensuring a smooth transition of liabilities to the transferee company without additional security requirements. The creditors of both companies, including secured creditors, unsecured creditors, and debenture holders, expressed no objection to the proposed amalgamation, as confirmed through filed affidavits and certificates from auditors.

Issue 4:
The compliance with the Companies Act, 1956 regarding authorized share capital and investments was addressed. The need for the transferee company to increase its authorized capital to accommodate the shares to be allotted to transferor-company shareholders was highlighted. Additionally, the cancellation of investments and shares between the two companies was clarified and resolved to align with the scheme of amalgamation.

Issue 5:
The Official Liquidator's report confirmed that the companies' affairs were conducted without prejudice to public interest. No objections were raised post-publication following the admission of the company petitions. Consequently, the Court allowed the company petitions, considering the compliance with legal requirements, shareholder and creditor approvals, and the absence of objections impacting public interest.