2016 (8) TMI 1268 - HC - Companies Law

Scheme of amalgamation - seeking directions of this court to dispense with the requirement of convening the meeting of its secured creditors and for convening separate meetings of its equity shareholders and unsecured creditors - right to vote by electronic means - Held that - We are not inclined to allow the prayer of the applicants to provide to its equity shareholders with the facility to exercise their right to vote by electronic means. However, since there is no bar of sending the notices by ordinary post in a court convened meeting, therefore, the second prayer of the applicants regarding sending of notices to its members and creditors by ordinary post is accepted. In case the quorum as noted above for the meetings is not present, then the meetings shall be adjourned by half an hour, and thereafter the persons present and voting shall be deemed to constitute the quorum. For the purpose of computing the quorum, the valid proxies shall also be considered, if the proxy in the prescribed form duly signed by the person entitled to attend and vote at the meetings is filed with the registered office of the applicant company at least 48 hours before the meetings. The Chairpersons and Alternate Chairpersons shall ensure that the proxy registers are properly maintained. The Chairpersons and Alternate Chairpersons shall ensure that notices for convening the aforesaid meetings of the equity shareholders and unsecured creditors of the applicant/transferor company no. 1, along with copies of the Scheme of Arrangement and Amalgamation and the statement under Section 393 of the Companies Act, 1956, are sent to the equity shareholders and unsecured creditors of the applicant/transferor company no. 1 by ordinary post at their registered or last known addresses at least 21 days before the date appointed for the meeting, in their presence or in the presence of their authorized representatives. Notice of the meeting shall also be published in the Delhi editions of the newspapers Financial Express (English) and Navbharat Times (Hindi) in terms of the Companies (Court) Rules, 1959 at least 21 days before the date appointed for the meetings.

Summary

Issues:
Application under Sections 391 to 394 of the Companies Act, 1956 seeking directions to dispense with the requirement of convening the meeting of secured creditors and hold separate meetings of equity shareholders and unsecured creditors for approving the Scheme of Arrangement and Amalgamation.

Analysis:
1. The applicant company sought directions under Sections 391 to 394 of the Companies Act, 1956 to dispense with the requirement of convening a meeting of secured creditors and to hold separate meetings of equity shareholders and unsecured creditors to consider and approve the proposed Scheme of Arrangement and Amalgamation involving three companies.
2. The applicant, a listed company, had its registered office in New Delhi, while the other companies were based in Mumbai. Separate applications were filed in the respective jurisdictions seeking sanction of the Scheme.
3. The applicant company's history, share capital structure, and financial statements were presented, along with details of the proposed Scheme of Arrangement and Amalgamation aimed at business expansion and enhanced customer services.
4. Share exchange ratios were outlined in the Scheme for issuance and allotment of equity shares and preference shares to shareholders of the involved companies.
5. The Board of Directors had approved the Scheme, and consents from secured creditors were obtained, eliminating the need for a secured creditors' meeting.
6. Meetings of equity shareholders and unsecured creditors were scheduled, with specific quorum requirements and appointment of Chairpersons and Alternate Chairpersons for conducting the meetings.
7. The request for electronic voting by equity shareholders was denied due to legal restrictions, but the permission to send notices by ordinary post was granted.
8. Provisions for adjournment of meetings, quorum calculations, proxy considerations, and maintenance of proxy registers were specified.
9. Detailed instructions were provided for sending meeting notices, publishing in newspapers, and conducting meetings in a fair manner.
10. Chairpersons and Alternate Chairpersons were entitled to issue directions to ensure the meetings' fairness, with specified fees and reporting requirements.
11. The application was allowed in the mentioned terms, concluding the judgment.