2008 (5) TMI 427 - HC - Companies Law

Scheme of amalgamation - Held that - Having regard to the facts and circumstances of the case there does not appear to be any legal impediment in sanctioning the proposed scheme of amalgamation. Consequently, sanction is hereby granted to the proposed scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956 for amalgamation of the transferor-company with the transferee-company. The certified copy of this order shall be filed with the Registrar of Companies within five weeks. It is clarified that this order should not be construed as an order granting exemption from payment of stamp duty if payable in accordance with law in regard to increase in the share capital of the transferee-company. Upon sanction becoming effective and from the appointed date, the transferor Company shall stand dissolved without its formal winding up.

Summary

Issues:
1. Sanction of proposed scheme of amalgamation under sections 391(2) and 394 of the Companies Act, 1956 for amalgamation of transferor-company with transferee-company.

Analysis:
The petition was filed by 'M/s. Sunehari Financial Services Pvt. Ltd.' and 'M/s. Sunehari Exports Ltd.' seeking approval for the proposed scheme of amalgamation. The transferor-company was initially a Public Limited Company but later converted into a Private Limited Company engaged in trading gold, real estate investments, and related activities. The authorized share capital of the transferor-company was Rs. 2,00,00,000 divided into 20,00,000 equity shares. The transferee-company, 'M/s. Sunehari Exports Ltd.,' was originally a Private Limited Company and later changed its name. Both companies are located in Delhi. A previous Company Application was allowed, dispensing with certain meetings for the transferor-company but requiring meetings for the transferee-company's shareholders, creditors, and equity shareholders. These meetings unanimously approved the scheme of amalgamation.

After the petition was filed, notices were issued to the Official Liquidator and the Regional Director (Northern Region). The Official Liquidator reported no complaints against the scheme, stating that the transferor-company's affairs were not conducted prejudicially. The Regional Director raised an objection regarding compliance with listing agreements and SEBI guidelines, which was addressed in the proposed scheme. The Regional Director expressed satisfaction with the response, and no objections were raised during the proceedings by the representatives of the Official Liquidator and the Regional Director.

The proposed scheme included provisions for protecting the transferor-company's employees and accounting treatment post-amalgamation under the 'Pooling of interest' method. The share exchange ratio was determined based on a valuation report. The scheme aimed to consolidate the companies into a single entity for operational efficiencies, synergies, and cost reduction. The scheme also outlined the dissolution of the transferor-company without winding up upon approval. The Court found no legal impediment and granted sanction to the scheme, directing the filing of the order with the Registrar of Companies. The transferee-company was directed to deposit costs in the Common Pool Fund of the Official Liquidator within a specified timeframe, leading to the disposal of the petition.