2016 (8) TMI 1246 - Board - Companies Law

Scheme of amalgamation - directions of this court to dispense with the requirement of convening the meetings of their equity shareholders, secured and unsecured creditors, to consider and approve, with or without modification, the proposed Scheme of Amalgamation need to be adhered to. The requirement of convening the meetings of the equity shareholders, secured and unsecured creditors of the transferee company, to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with.

Summary

Issues:
Application under Sections 391 to 394 of the Companies Act, 1956 seeking directions to dispense with shareholder and creditor meetings for Scheme of Amalgamation.

Analysis:
The joint application under Sections 391 to 394 of the Companies Act, 1956 was filed by the applicant companies to seek directions to dispense with the requirement of convening meetings of equity shareholders and creditors for the proposed Scheme of Amalgamation involving three companies. The transferor companies, incorporated in 1994 and 1996, and the transferee company, originally incorporated in 1989, are all based in New Delhi. The Scheme aims to merge the transferor companies with the transferee company, citing reasons such as improved asset base, cost reduction, and future growth opportunities. The share exchange ratio is detailed in the Scheme, specifying the allotment of equity shares to shareholders of the transferor companies based on a set ratio.

The applicants provided copies of the Memorandum and Articles of Association of the involved companies, along with audited balance sheets and reports of auditors as of 31st March, 2015. The proposed Scheme's details, including its benefits and objectives, were outlined in the application and accompanying affidavit. Notably, the Board of Directors of all three companies unanimously approved the Scheme in separate meetings held on 2nd March, 2016. Importantly, it was highlighted that no pending proceedings under Sections 235 to 251 of the Companies Act, 1956 existed against the involved companies.

Regarding the shareholders and creditors of each company, consents or no objections in writing to the proposed Scheme were obtained and placed on record. For the transferor company no. 1, with three equity shareholders and one unsecured creditor, the requirement of convening meetings was dispensed with due to the obtained consents. Similarly, for transferor company no. 2 and the transferee company, consents were obtained from all relevant stakeholders, including equity shareholders, secured and unsecured creditors, leading to the dispensation of the meeting requirement. As a result, the application was allowed in the stated terms by the Company Law Board in New Delhi, as per the judgment delivered by Sudershan Kumar Misra, J.