2016 (2) TMI 1127 - HC - Companies Law

Scheme of amalgamation - Held that - Dispensation of the meeting of the Equity Shareholders of the applicant Company and convening separate meetings of the Secured Creditors and Unsecured Creditors of the applicant Company to be adhered.

Summary

Issues:
Application under Sections 391 to 394 of the Companies Act, 1956 for a proposed Scheme of Arrangement involving amalgamation of two companies. Dispensation of meeting of Equity Shareholders sought. Directions for separate meetings of Secured Creditors and Unsecured Creditors requested.

Analysis:
The applicant, a Transferor Company, filed an application under Sections 391 to 394 of the Companies Act, 1956, for a proposed Scheme of Arrangement involving the amalgamation of two companies. The Scheme aimed at merging the Transferor Company with the Transferee Company, subject to approval from the Shareholders and Creditors. The applicant sought dispensation from convening a meeting of Equity Shareholders, as all Shareholders had provided written consent letters approving the Scheme. The Court, after considering the submissions and documents provided, granted the dispensation for the Equity Shareholders' meeting.

Regarding the Creditors, the Court ordered separate meetings to be convened for Secured Creditors and Unsecured Creditors at a specified location in Gujarat. The Notice for these meetings, along with the Scheme of Arrangement and Explanatory Statement, was to be sent to all Creditors at least 21 days before the meetings. Additionally, a public notice was to be published in specified newspapers, providing details of the meetings and where relevant documents could be obtained.

The Chairman for the Creditors' meetings was designated, with specific responsibilities outlined. The Chairman had the authority to conduct the meetings, including adjournments, amendments to the Scheme, and decision-making through a poll. The quorum for the meetings was set at 2 for Secured Creditors and 10 for Unsecured Creditors. Voting by proxy was permitted, subject to timely submission of the prescribed form.

The value of each creditor's vote was to be determined based on the applicant Company's records, with the Chairman having the final decision in case of disputes. After the meetings, the Chairman was required to report the results to the Court within 14 days, verified by an affidavit. The Court disposed of the application accordingly, setting out detailed procedures and requirements for the meetings and decision-making processes involving the Creditors.