2016 (7) TMI 1355 - HC - Companies Law

Scheme of Amalgamation - Held that - All the equity shareholders have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meeting of the equity shareholders of the transferor company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured or unsecured creditor of the transferor company, as on 30th November, 2015. The transferee company has 03 equity shareholders, 01 secured creditor and 65 unsecured creditors. All the equity shareholders, the sole secured creditor and 26 out of 65 unsecured creditors, being 40% in number and 85% in value, have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, 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(1) and 394 of the Companies Act, 1956 seeking dispensation with the requirement of convening meetings of equity shareholders, secured and unsecured creditors for Scheme of Amalgamation.

Detailed Analysis:

1. Background and Jurisdiction:
The joint application under Sections 391(1) and 394 of the Companies Act, 1956, along with Rule 9 of the Companies (Court) Rules, 1959, was filed by the applicant companies for directions to dispense with the need to convene meetings of equity shareholders, secured, and unsecured creditors regarding the proposed Scheme of Amalgamation. Both the transferor and transferee companies are located in New Delhi, falling under the jurisdiction of the Delhi High Court.

2. Company Incorporation Details:
The transferor company was incorporated on 14th August, 2000, and the transferee company on 17th January, 2006, under the Companies Act, 1956, with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

3. Share Capital Structure:
The authorized share capital of the transferor company is ?10,00,000/- divided into 1,00,000 equity shares of ?10/- each, while the issued, subscribed, and paid-up share capital is ?8,81,000/-. On the other hand, the transferee company has an authorized share capital of ?40,00,000/- divided into 4,00,000 equity shares of ?10/- each, with an issued, subscribed, and paid-up share capital of ?35,30,000/-.

4. Submission of Documents:
Memorandum, Articles of Association, audited balance sheets as of 31st March, 2015, and the Scheme of Amalgamation have been submitted. The Scheme aims to amalgamate the transferor company, a wholly owned subsidiary of the transferee company, to enhance financial stability, resource mobilization, leverage facilities, and reduce operational costs.

5. Share Exchange Ratio and Compliance:
The proposed Scheme outlines a share exchange ratio where the transferee company shall issue 96 equity shares of ?10/- each for every 100 equity shares of ?10/- each held in the transferor company. The applicants confirmed no pending proceedings under relevant sections of the Companies Act, 1956 or 2013 against the applicant companies.

6. Approval and Consents:
The Board of Directors of both companies unanimously approved the Scheme, and all equity shareholders of the transferor company and a significant portion of the transferee company's shareholders and creditors provided their consents or no objections in writing. Consequently, the Court dispensed with the requirement of convening meetings for approval.

7. Final Decision:
Considering the approvals, consents, and compliance with legal requirements, the Court allowed the application, thereby granting dispensation with the need for meetings of equity shareholders, secured, and unsecured creditors for the proposed Scheme of Amalgamation.

This detailed analysis encapsulates the key aspects and legalities addressed in the judgment concerning the application for dispensation with meetings for the Scheme of Amalgamation under Sections 391(1) and 394 of the Companies Act, 1956.