2016 (3) TMI 1263 - HC - Companies Law

Scheme of Amalgamation - whether Holding Transferee Company is not required to take out separate proceedings for obtaining the sanction of this Court to the proposed Scheme of Amalgamation of its wholly owned subsidiary Company, with itself? - Held that - No separate proceedings are required to be undertaken by the Transferee Company, being the Holding Company, under the provisions of Section 391(2) of the Companies Act, 1956.

Summary

Issues:
- Whether separate proceedings are required under Section 391(2) of the Companies Act, 1956 for the proposed Scheme of Amalgamation.

Analysis:
The judgment involves a Judges' Summons taken out by the applicant Transferee Company, seeking a ruling that separate proceedings under Section 391(2) of the Companies Act, 1956 are not necessary for the proposed Scheme of Amalgamation with the Transferor Company. The applicant, as the Holding Company, holds the entire share capital of the Transferor Company, and it is stated that upon sanction of the Scheme, the shares held by the Transferee Company will be cancelled without issuing new shares. The capital structure of the Transferee Company is expected to remain unchanged, and the rights of existing shareholders will not be affected. The applicant relies on a previous order of the Court and argues that no separate proceedings are required for the Holding Transferee Company.

Upon considering the submissions and the Scheme of Amalgamation, the Court, represented by Abhilasha Kumari J., held that separate proceedings under Section 391(2) of the Companies Act, 1956 are indeed not necessary for the Transferee Company, as it is the Holding Company in the proposed amalgamation. The Court's decision is based on the understanding that the capital structure will not change, and existing shareholders' rights will remain unaffected. The application for the Judges' Summons is disposed of accordingly.