2014 (3) TMI 1106 - HC - Companies Law

Scheme of amalagamation - Held that - In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies, representation/reports filed by the Regional Director and the Official Liquidator, and no objections received to the proposed Scheme, there appears to be no impediment to grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. Certified copy of the order will be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In terms of the provisions of Sections 391 and 394 of the Companies Act, 1956, and in terms of the Scheme, the Transferor Company and the property, rights and powers concerning the same will be transferred to and vest in the Transferee Company without any further act or deed

Summary

Issues:
1. Second motion petition under Sections 391-394 of the Companies Act, 1956 for merger.
2. Share exchange ratio for amalgamation.
3. Dispensation of requirement for convening meetings of Shareholders and Unsecured Creditors.
4. Official Liquidator's report and observations on the appointed date.
5. Compliance with Reserve Bank of India and FEMA regulations for foreign transactions.
6. Filing of revised returns and compliance with statutory procedures.
7. Violation of Companies Act, 1956 regarding Annual Returns and Balance Sheets.
8. Approval of the Scheme under Sections 391 and 394 of the Companies Act, 1956.
9. Transfer of property, rights, and powers to the Transferee Company.
10. Voluntary deposit in the Common Pool fund of the Official Liquidator.

Analysis:

1. The petition involves a second motion under Sections 391-394 of the Companies Act, 1956 for the merger of two companies. The Transferor Company is proposed to be merged into the Transferee Company, and the share exchange ratio for amalgamation is set at 1 equity share of Rs. 10 each with voting rights of the Transferee Company for every 27,512 equity shares of Rs. 10 each held by the Transferor Company.

2. The Court previously dispensed with the requirement for convening meetings of Shareholders and Unsecured Creditors of the Petitioner Companies. The Official Liquidator's report stated no complaints against the proposed Scheme and no objections were raised to the scheme of amalgamation.

3. Concerns were raised regarding the appointed date of 01.04.2011 and the suggestion to re-fix it as 01.04.2013 due to the availability of audited balance sheets. The Petitioner Companies undertook to comply with all prescribed procedures for revising their financial statements and returns.

4. Compliance with Reserve Bank of India and FEMA regulations for transactions involving foreign entities was highlighted. The Petitioner Transferee Company committed to adhering to all applicable statutes and guidelines.

5. The Regional Director observed violations of the Companies Act, 1956 regarding the Annual Returns and Balance Sheets of the Petitioner Companies. However, the companies clarified that they had indeed filed the required documents.

6. Despite the concerns raised, with no objections received to the Scheme and approval from Shareholders and Creditors, the Court granted sanction to the Scheme under Sections 391 and 394 of the Companies Act, 1956. The Transferor Company would be dissolved without winding up procedures.

7. The order mandated the filing of a certified copy with the Registrar of Companies and the transfer of property, rights, and powers to the Transferee Company. It also clarified that the order did not exempt from stamp duty or taxes and required compliance with other legal requirements.

8. Additionally, the Petitioner Companies agreed to voluntarily deposit a sum in the Common Pool fund of the Official Liquidator, which was accepted by the Court, leading to the allowance of the petition in the specified terms.