2015 (11) TMI 1707 - HC - Companies Law

Scheme of amalgamation - Held that - In the facts and circumstances of the present case, it is ordered that separate meetings of the Secured Creditors and Unsecured Creditors of the Applicant Company shall be convened and held at The Pride Hotel, Judges Bungalow Road, Bodakdev, Ahmedabad - 380 054 in the state of Gujarat on Monday, the 21st December 2015 respectively at 4.00 p.m. and 5.00 p.m., for the purpose of considering and if thought fit, approving with or without modifications, the proposed Composite scheme of Arrangement in the nature of transfer of undertaking, amalgamation as well as restructure of Share Capital between Troikaa Pharmaceuticals Limited and Troikaa Exports Private Limited, as proposed between the Applicant Company and its creditors. That at least 21 clear days before the meetings to be held as aforesaid, and adherence to other relevant provisions regarding Chairman appointment, quorum for the meeting, books of accounts of the company, etc. .

Summary

Issues:
Application under Sec. 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956 for a proposed Composite Scheme of Arrangement involving transfer of undertaking, amalgamation, and restructure of Share Capital between two companies. Prayers for dispensation of meetings of Equity Shareholders and Preference Shareholders, and directions for separate meetings of Secured and Unsecured Creditors.

Analysis:

1. Dispensation of Meetings of Equity Shareholders and Preference Shareholders:
The Applicant, a closely held limited company, sought dispensation from convening meetings of Equity Shareholders and Preference Shareholders as all shareholders had approved the scheme through written consent letters. The court granted dispensation considering the small number of shareholders and their unanimous approval, as evidenced by the consent letters annexed to the application.

2. Separate Meetings of Secured and Unsecured Creditors:
The Applicant requested the convening of separate meetings for Secured and Unsecured Creditors to obtain their approval for the proposed scheme. The court ordered that separate meetings be held at a specified location on a designated date for the creditors to consider and approve, with or without modifications, the proposed Composite Scheme of Arrangement.

3. Notice and Publication Requirements:
The court mandated that at least 21 days before the meetings, notices must be sent to all Secured and Unsecured Creditors, including the Scheme of Arrangement, Explanatory Statement, and Form of Proxy. Additionally, notices must be published in specified newspapers announcing the availability of relevant documents for inspection at designated locations.

4. Appointment of Chairman and Meeting Conduct:
The Director of the Applicant Company or a designated alternate was appointed as the Chairman for the creditor meetings. The Chairman was entrusted with the responsibility to issue advertisements, send out notices, and conduct the meetings in accordance with the Articles of Association and Companies (Court) Rules, including the power to adjourn the meeting if necessary.

5. Quorum and Voting Procedures:
The quorum for Secured Creditors was set at 2 and for Unsecured Creditors at 15, either present in person or through proxy. Voting by proxy was permitted, subject to submission of the prescribed form at least 48 hours before the meeting. The value of each creditor's vote was to be determined based on the company's records, with the Chairman having the final decision in case of disputes.

6. Reporting to the Court:
The Chairman was directed to report the meeting results to the Court within 14 days of the meetings' conclusion, with the report to be verified by affidavit. The Court then disposed of the application, indicating the completion of the necessary legal proceedings related to the proposed scheme of arrangement.

This detailed analysis outlines the key aspects of the judgment, including the court's decisions regarding dispensation of shareholder meetings, requirements for creditor meetings, appointment of Chairman, voting procedures, and reporting obligations, all essential for the implementation of the proposed scheme of arrangement under the Companies Act, 1956.