2016 (1) TMI 1314 - HC - Companies Law

Scheme of Amalgamation - Held that - Given the fact that all shareholders and creditors (i.e. the unsecured creditors) of the transferor company have given their consent and/or No Objection (NOC) to the proposed scheme, there shall be no requirement to convene meetings qua them. Accordingly, given the fact that the transferor company is a 100% subsidiary of the transferee company, the requirement to convene meetings of shareholders and creditors can be dispensed with. It is ordered accordingly.

Summary

Issues:
Application under Section 391 and 394 of the Companies Act, 1956 for Scheme of Amalgamation.

Analysis:
The judgment pertains to a first motion application jointly moved by a transferor company and a transferee company under Section 391 and 394 of the Companies Act, 1956 for a Scheme of Amalgamation. The applicants' registered offices are within the territorial jurisdiction of the Delhi High Court. Details regarding the incorporation dates and capital of the applicants have been provided in the affidavits. The Memorandum, Articles of Association, and the latest audited annual accounts have been submitted. It is confirmed that no proceedings under Sections 235 to 251 of the Act are pending against the applicants. The Scheme has been approved by the respective Boards of Directors of the applicants, and it is stated that no shares will be issued in the transferee company post-amalgamation. The valuation of shares is deemed unnecessary. Statutory and other dues have been paid in full, as confirmed by a chartered accountant's certificate.

The status of shareholders, secured and unsecured creditors, and their consent for the proposed scheme has been detailed in a table provided in the application. A prayer has been made to dispense with the requirement of convening meetings of shareholders and creditors. The court, based on previous judgments, decided to dispense with the need for such meetings, considering that all shareholders and unsecured creditors of the transferor company have given their consent to the scheme. It was also noted that the transferee company is not required to file any separate application under Section 391 and 394 of the Act. Given that the transferor company is a 100% subsidiary of the transferee company, the court ordered that the requirement to convene meetings of shareholders and creditors can be dispensed with. As a result, the application was allowed in the aforementioned terms.