2015 (11) TMI 1708 - 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 companies with itself? - Held that - No separate proceedings is required to be undertaken by Transferee Company being the Holding Company under the provisions of Sec. 391(2) of the Companies Act, 1956.

Summary

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

Analysis:
The judgment pertains to a Judges Summons taken out by the applicant, a Transferee Company, seeking a ruling that separate proceedings under Sec. 391(2) of the Companies Act, 1956 are not necessary for the proposed Scheme of Amalgamation involving its wholly owned subsidiary companies. The applicant argued that as the holding company of the Transferor Companies, it holds their entire share capital, and upon sanction of the Scheme, the shares held by the Transferee Company will be cancelled without issuing new shares. The applicant contended that the capital structure and rights of existing shareholders will remain unaffected. The applicant relied on a previous order of the Court and submitted that no separate proceedings were warranted.

Upon considering the submissions and the Scheme of Amalgamation, the Court, after hearing the arguments of the applicant's advocate, held that no separate proceedings were required for the Transferee Company, being the Holding Company, under Sec. 391(2) of the Companies Act, 1956. The Court's decision was based on the understanding that the proposed amalgamation would not impact the capital structure or rights of the existing shareholders of the Transferee Company. As a result, the application was disposed of accordingly.

This judgment clarifies the legal position regarding the necessity of separate proceedings under Sec. 391(2) of the Companies Act, 1956 in the context of a Scheme of Amalgamation involving a Transferee Company and its wholly owned subsidiary companies. The Court's ruling provides guidance on the requirements and considerations for such transactions, emphasizing the importance of assessing the impact on the capital structure and shareholder rights to determine the need for additional proceedings.