2015 (7) TMI 1248 - HC - Companies Law

Scheme of arrangement in the nature of amalgamation - Held that - Separate proceedings are not necessary for the transferee company being the holding company, it is held in the present case also that separate proceedings are not required to be filed for the transferee company. Attention of the court is drawn to Para 6 of the affidavit in support of the Judges Summons. It has been pointed out that the applicant being a listed public limited company, pursuant to clause 24(f) of the Listing Agreement, the applicant company has obtained the requisite approval from the concerned stock exchanges viz. BSE Limited and National Stock Exchange of India Limited. A copy of each of them have been placed on record as Exhibit E . Perusal of the same makes it clear that an additional condition has been prescribed by the SEBI with reference to previous acquisition of shares. The same has now been included in clause 17(iii) of the scheme. The applicant company has undertaken to comply with the same by conducting an independent procedure for Postal Ballot and e voting in this regard. It has further undertaken that the result of the same shall be placed on record before final sanction of the scheme.

Summary

Issues:
1. Scheme of arrangement for amalgamation under Sections 391 to 394 of the Companies Act, 1956.
2. Dispensation of separate proceedings for the transferee company.
3. Legal position regarding no change in capital structure after amalgamation.
4. Requirement of separate proceedings for the holding company.
5. Compliance with Listing Agreement and SEBI regulations for a listed public limited company.

Analysis:
1. The judgment deals with a scheme of arrangement proposing the amalgamation of two companies, where Apar Lubricants Limited is to be merged with Apar Industries Limited under Sections 391 to 394 of the Companies Act, 1956.

2. The application for dispensation of separate proceedings for the transferee company, Apar Industries Limited, was filed, arguing that since the transferor company is a wholly owned subsidiary of the transferee company, no shares will be issued by the transferee company as consideration for the amalgamation. This would result in no change in the capital structure of the transferee company, making separate proceedings unnecessary.

3. The submission was supported by settled legal positions and judgments of various High Courts, including cases like Sharat Hardware Industries P.Ltd. and Mahaamba Investments Limited V. IDI Limited. The court acknowledged the consistent legal view that separate proceedings are not required for the transferee company when it is the holding company, as the rights and interests of its shareholders remain unaffected.

4. The court noted that the applicant, being a listed public limited company, had obtained necessary approvals from stock exchanges as per the Listing Agreement. Additional conditions prescribed by SEBI were also addressed, with the applicant undertaking to comply through procedures like Postal Ballot and e-voting, ensuring transparency and regulatory compliance.

5. Ultimately, the court disposed of the application, affirming that separate proceedings for the transferee company were not necessary, given the legal position, compliance with regulations, and the specific circumstances of the amalgamation scheme.