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Issues:
Petition under section 391(2) read with section 394 of the Companies Act, 1956 for sanction of Scheme of Amalgamation between two companies. Analysis: 1. Incorporation and Capital Structure: The transferee-company and transferor-company were incorporated on the same date and later became public limited companies with the same authorized and paid-up share capital. Both companies are closely-held public limited companies under the same management and wholly owned subsidiaries of another company. 2. Purpose of Amalgamation: The merger is aimed at rationalizing business activities, corporate restructuring, and achieving benefits like better management, development, growth, synergies, financial base, economies of scale, and reduced overheads. The board of directors of both companies approved the Scheme as beneficial for shareholders, creditors, and stakeholders. 3. Consent and Meetings: Equity shareholders and creditors of the companies had given their consent to the Scheme, and the Court dispensed with the requirement of convening their meetings. 4. Reports and Objections: The Official Liquidator reported no prejudicial conduct in the affairs of the transferor-company. However, the Regional Director raised concerns regarding the increase in authorized share capital, valuation method, and discrepancy in the appointed date and balance sheet date. 5. Valuation and Legal Validity: The petitioner relied on legal precedents to support the valuation based on the book value method and argued that objections regarding market value ascertainment were not valid. The Court agreed that book value method is an accepted valuation concept, and the exchange ratio was determined by experienced chartered accountants using a known method. 6. Court's Decision: The Court held that objections raised by the Regional Director were not substantial, as the valuation method was valid, and the Scheme of Amalgamation was a comprehensive process. The Court granted sanction to the Scheme, allowing the transferor-company to dissolve without winding up and directed public notification of the order. 7. Final Disposition: Any interested party could seek further directions from the Court, and the petition was disposed of in accordance with the order granting sanction to the Scheme of Amalgamation. This detailed analysis covers the incorporation details, purpose of amalgamation, consent procedures, reports, objections, valuation methods, legal validity, court's decision, and final disposition of the petition under the Companies Act, 1956.
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