2014 (1) TMI 1821 - HC - Companies Law

Scheme of Arrangement in the nature of Amalgamation - Held that - All the Equity Shareholders and sole Preference Shareholder of the Applicant Transferor Company have given their approval to the Scheme in form of consent letters, which are placed on record as Annexures D and E to the application. The certificates from the Chartered Accountant confirming the status of the Equity Shareholders and sole Preference Shareholder of the Company as well as receipt of written consent from all the Shareholders are also placed on record as Annexure F , collectively. In view of the same, the dispensation of the meetings of the Equity Shareholders and sole Preference Shareholder is sought and is hereby granted.

Summary

Issues:
1. Application under Sections 391 to 394 of the Companies Act, 1956 for Amalgamation.
2. Approval of Scheme by Equity Shareholders and Preference Shareholder.
3. Convening separate meetings for Secured and Unsecured Creditors.
4. Notice requirements for Creditors' meetings.
5. Appointment of Chairman for the meetings.
6. Powers of the Chairman during the meetings.
7. Quorum for Secured and Unsecured Creditors' meetings.
8. Voting by proxy.
9. Determination of the value of votes.
10. Reporting the meeting results to the Court.

Analysis:
1. The application was filed under Sections 391 to 394 of the Companies Act, 1956 for the Amalgamation of two group companies with a Transferee Company. All Equity Shareholders and the sole Preference Shareholder of the Transferor Company approved the Scheme through consent letters, supported by certificates from a Chartered Accountant. Dispensation of meetings of Equity Shareholders and Preference Shareholder was granted based on the approvals received.

2. Separate meetings of Secured and Unsecured Creditors were ordered to be convened and held for considering and approving the proposed Scheme of Arrangement. The meetings were scheduled at a specific location in Gujarat, with detailed instructions on the notice requirements to be fulfilled at least 21 days before the meetings, including sending notices to Creditors and publication in newspapers.

3. The Director of the Applicant Company was appointed as the Chairman for the meetings, with instructions to issue advertisements and send out notices. The Chairman was granted powers under the Articles of Association and the Companies (Court) Rules, 1959, for conducting the meetings, including making amendments to the Scheme, if necessary, adjourning meetings, and determining decisions through a poll.

4. The quorum for the meetings of Secured and Unsecured Creditors was specified, along with provisions for voting by proxy. The Chairman was tasked with determining the value of votes based on the Company's Books of Accounts, with the final decision on disputed entries resting with the Chairman.

5. Following the meetings, the Chairman was required to report the results to the Court within 14 days of the conclusion of the meetings, with verification through an affidavit. The Company Application was disposed of after the completion of the necessary procedures and reporting to the Court.