2015 (10) TMI 2689 - HC - Companies Law

Scheme of Arrangement in the nature of Demerger - Held that - Having heard the learned Advocate for the applicant and having perused the record, it appears to the Court that consent of parent holding company being the only shareholder of the applicant Company has been obtained. In view of the above, the meeting of the shareholders of the applicant company is ordered to be dispensed with. It is further ordered that this being the resulting company, meeting of the creditors is ordered not to be held.

Summary

Issues: Dispensation of meeting of Equity Shareholders in a Scheme of Arrangement

Analysis:
The judgment involves the applicant, a company resulting from the demerger of AAC Block Division of Mohit Industries Limited. The applicant, Bigbloc Construction Limited, sought dispensation of the meeting of Equity Shareholders, stating that all shareholders had given their consents in writing for the Scheme of Arrangement. The applicant, being a wholly owned subsidiary of the demerged company, obtained written consent from the demerged company for the Scheme of Arrangement. The Court noted that the parent holding company, as the only shareholder of the applicant, had given its consent. Consequently, the Court ordered the dispensation of the meeting of the shareholders of the applicant company. Additionally, as the resulting company, the meeting of creditors was also ordered not to be held. The application was disposed of in accordance with these orders.

This judgment primarily addresses the dispensation of the meeting of Equity Shareholders in a Scheme of Arrangement, focusing on the consent obtained from the parent holding company, which was the only shareholder of the applicant company. The Court's decision was based on the fact that all shareholders had given their consents in writing, and the parent holding company had approved the Scheme of Arrangement. As a resulting company, the applicant was not required to hold a meeting of creditors. The judgment highlights the importance of obtaining consent from relevant parties in such corporate restructuring processes and the legal implications of being a wholly owned subsidiary in the context of dispensing with shareholder meetings.