2016 (2) TMI 1115 - 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 to 394 of the Companies Act, 1956 seeking directions to dispense with shareholder and creditor meetings for Scheme of Amalgamation.

Analysis:
1. Background and Incorporation Details: The application involves two companies, the transferor company and the transferee company, both originally incorporated under the Companies Act, 1956. The transferor company changed its name from I S P India Private Limited to Tata Internet Services Private Limited, while the transferee company changed its name from Tata Teleservices Private Limited.

2. Share Capital Structure: The transferor company has an authorized share capital of &8377; 1,50,00,00,000/- divided into equity shares, while the transferee company has a complex capital structure comprising equity shares, preference shares, and convertible preference shares.

3. Scheme of Amalgamation: The application includes the Scheme of Amalgamation aimed at pooling resources, enhancing operational efficiencies, and reducing costs for the benefit of stakeholders. The proposed amalgamation is expected to optimize manpower utilization and streamline administrative functions.

4. Share Exchange Ratio: The Scheme specifies that no new shares will be allotted by the transferee company, as it already holds all shares of the transferor company, eliminating the need for share exchange.

5. Board Resolutions and Shareholder Consents: The Board of Directors of both companies have approved the Scheme, and consents/no objections from equity and preference shareholders have been obtained and deemed in order.

6. Creditor Meetings Dispensation: While consents from secured and unsecured creditors of the transferee company were not obtained, the application seeks dispensation of their meetings based on the companies' financial stability, control structure, and precedents where similar dispensations were granted by the Court.

7. Legal Precedents: The application cites relevant judgments where the Court dispensed with creditor meetings under similar circumstances, supporting the argument for dispensation in this case.

8. Court Decision: The Court, after considering submissions, legal precedents, and the Scheme of Amalgamation, allowed the application, dispensing with the requirement of convening and holding meetings of the secured and unsecured creditors of the transferee company.

This comprehensive analysis covers the key aspects of the judgment, detailing the issues involved and the Court's decision regarding the Scheme of Amalgamation and dispensation of shareholder and creditor meetings.