2015 (2) TMI 1245 - HC - Companies Law

Scheme of Amalgamation seeking - directions of this court to dispense with the requirement of convening the meetings of its equity shareholders, secured and unsecured creditors to consider and approve the said claim - Held that - In view of the submissions made at the bar and the settled law on the subject, the requirement of convening and holding the meetings of the secured and unsecured creditors of the applicant/transferee company, to consider and if though fit, approve, with or without modification, the proposed Scheme of Amalgamation, is dispensed with.

Summary

Issues: Application under Sections 391(1) & 394 of the Companies Act, 1956 seeking dispensation of meetings for approval of Scheme of Amalgamation.

Analysis:
1. The applicant, a transferee company, filed an application under Sections 391(1) & 394 of the Companies Act, 1956, seeking directions to dispense with the requirement of convening meetings of equity shareholders, secured and unsecured creditors to consider and approve the proposed Scheme of Amalgamation with the transferor company.

2. The applicant's registered office is in New Delhi, within the court's jurisdiction, while the transferor company is located in Uttar Pradesh, outside the court's jurisdiction.

3. The applicant company was incorporated under the Companies Act, 1956, on 9th April 2010, with the Registrar of Companies in Delhi & Haryana.

4. The authorized share capital of the applicant company is Rs. 5,00,00,000 divided into 50,00,000 equity shares of Rs. 10 each, with an issued, subscribed, and paid-up capital of Rs. 4,99,90,000 divided into 49,99,000 equity shares of Rs. 10 each.

5. The applicant submitted the Memorandum, Articles of Association, audited balance sheet as of 31st March 2014, and the Scheme of Amalgamation, claiming business synergy, pooling of resources, and other benefits from the proposed amalgamation.

6. The Scheme mentioned that no shares would be issued by the transferee company to the transferor company due to their wholly-owned subsidiary relationship, aiming for economies of scale and enhanced business efficiency.

7. The applicant confirmed no pending proceedings under Sections 235 to 251 of the Companies Act, 1956, against the company.

8. The Board of Directors unanimously approved the proposed Scheme, and all seven equity shareholders provided written consents to the amalgamation, dispensing with the need for an equity shareholders' meeting.

9. Regarding secured and unsecured creditors, the applicant argued that as the transferor company is a wholly owned subsidiary, and no new shares would be issued, the creditors' rights would not be adversely affected, seeking dispensation of their meetings.

10. Citing previous judgments, the court agreed to dispense with the requirement of convening and holding meetings of secured and unsecured creditors, based on settled law and precedents.

11. Consequently, the court allowed the application, dispensing with the meetings of equity shareholders, secured, and unsecured creditors for the proposed Scheme of Amalgamation.