2016 (4) TMI 1240 - HC - Companies Law

Dispensation of convening of meeting of shareholders, secured and unsecured creditors of the applicant company - Scheme of amalgamation - Held that - The Board of Directors of the applicant-company in its meeting held on 08.09.2015 has resolved, approved and adopted the Scheme of Amalgamation of the applicant company with the transferee company subject to confirmation by this Court. Said resolution is at Annexure-C and it would indicate that Board of Directors of the applicant-company have approved the scheme of amalgamation-Annexure-G. The applicant company is a wholly owned subsidiary of the transferee company and therefore the transferee company has not filed any application before this Hon ble Court. Chartered Accountant of the applicant-company has also certified that as on 31.01.2016 there are no secured creditors and unsecured creditors as per certificate- Annexure-K. The applicant company has disclosed all the relevant material in the application and there is no impediment in law to grant the prayer sought for in the application. Hence, this court is of the considered view that prayer sought for deserves to be granted. Hence, following order is passed Company Application is hereby allowed. Convening of meeting of shareholders, secured and unsecured creditors is dispensed with.

Summary

Issues: Dispensation of convening of meeting of shareholders, secured and unsecured creditors in a company application for amalgamation.

Analysis:
The judgment delivered by the High Court of Karnataka pertains to a company application seeking dispensation of convening a meeting of shareholders, secured, and unsecured creditors in the context of a proposed scheme of amalgamation. The applicant company, registered under the Companies Act, 1956, had its registered office in Karnataka and was engaged in software development support services for online banking and e-commerce sectors. The Board of Directors had approved the Scheme of Amalgamation with a transferee company, which was a wholly owned subsidiary. The application stated that there were two shareholders in the applicant-company, as certified by a Chartered Accountant, and their consent to the scheme of amalgamation was provided. Additionally, the Chartered Accountant certified that there were no secured or unsecured creditors as of a specified date. The court noted that all relevant material had been disclosed in the application, and there was no legal impediment to granting the prayer for dispensation of the meeting. Consequently, the court allowed the company application, dispensed with the convening of the meeting of shareholders, secured, and unsecured creditors, and directed the filing of the Company Petition within two weeks from the date of the order.

This judgment underscores the importance of complying with the procedural requirements for amalgamation under the Companies Act, ensuring transparency by disclosing all relevant information, and obtaining necessary certifications from professionals like Chartered Accountants to support the application. The court's decision to dispense with the meeting highlights the significance of demonstrating that all stakeholders have been duly informed and have provided their consent, as in this case where the shareholders and creditors had no objections to the proposed scheme. By granting the dispensation, the court facilitates the expeditious progress of the amalgamation process while upholding the principles of corporate governance and legal compliance.