2016 (4) TMI 1257 - HC - Companies Law

Composite Scheme of Arrangement in the nature of Demerger - convening the meetings of the Equity Shareholders and Unsecured Creditors of the applicant Company - Held that - In view of the facts and circumstances and considering the submissions advanced, dispensation is sought from the procedure prescribed under Section 101(2) of the Companies Act, 1956 and under Rules 46 to 65 of the Companies (Court) Rules 1959 and the same is, hereby, granted.

Summary

Issues:
1. Application for dispensation of meetings of Equity Shareholders and Unsecured Creditors.
2. Utilization of Securities Premium Reserve Account and reduction of share capital.
3. Approval of the Scheme by Equity Shareholders through written consent letters.

Analysis:
1. The judgment pertains to an application filed by a Demerged Company for a Composite Scheme of Arrangement involving Demerger, Transfer of Real Estate and Portfolio Investment Undertakings, and amalgamation with a Transferee Company. The Applicant sought dispensation of meetings of Equity Shareholders and Unsecured Creditors, as all have approved the Scheme through written consent letters. The Court, after considering the submissions, granted the dispensation as all necessary approvals were in place.

2. The Court was apprised of the utilization of the Securities Premium Reserve Account of the Applicant Company as part of the Scheme. It was highlighted that the proposed reduction did not involve any diminution of liability or payment to shareholders. The order sanctioning the Scheme was deemed to confirm the reduction, and the approval by Equity Shareholders through consent letters was treated as a Special Resolution. The Court, after reviewing the submissions, granted dispensation from the prescribed procedures under the Companies Act, 1956 and related rules.

3. The judgment emphasized the importance of the Scheme's approval by Equity Shareholders through consent letters. It was noted that the reduction in share capital did not impact the interests of the creditors. The Court, considering the facts and submissions presented, granted dispensation from certain procedural requirements under the Companies Act, 1956 and related rules. The application was disposed of accordingly, affirming the validity of the Scheme as approved by the concerned parties.