2011 (7) TMI 1304 - HC - Companies Law

Summary

Issues Involved:
1. Sanction of the Scheme of Amalgamation.
2. Compliance with statutory provisions for increasing authorized share capital.
3. Adherence to Accounting Standards.
4. Compliance with laws of Mauritius.
5. Objections raised by the Regional Director.

Summary:

1. Sanction of the Scheme of Amalgamation:
The petitioner, Groovy Trading Private Limited, sought the sanction of the Scheme of Amalgamation between Well worth Investments Limited, Eternity Investments Limited, and Groovy Trading Private Limited. The Court noted that the transferor companies are incorporated in Mauritius and the transferee company is incorporated in India. The Court held that a "body corporate" not incorporated in India can be amalgamated with an Indian company, provided it does not violate any statutory restrictions and complies with applicable laws, including the Reserve Bank of India Act and the Foreign Exchange Management Act.

2. Compliance with statutory provisions for increasing authorized share capital:
The Regional Director raised objections regarding the increase in authorized share capital (Clause 4.1.1 and 4.2.1 of Part IV of the scheme). The petitioner company undertook to comply with Sections 16, 17, 94, 97, and 192 of the Companies Act, 1956, for increasing its authorized share capital before issuing equity shares to the transferor companies.

3. Adherence to Accounting Standards:
The Regional Director objected to the accounting entries (Clause 4.3 of Part IV of the scheme), stating they must comply with Accounting Standard-14 notified by the Central Government u/s 211(3A) of the Companies Act, 1956. The petitioner company undertook to comply with Accounting Standard-14 and make necessary adjustments in their Books of Account.

4. Compliance with laws of Mauritius:
The Regional Director raised objections regarding compliance with the laws of Mauritius (Clause 3.3 of Part III and Clause 3.2.8 of Part III of the scheme). The petitioner company undertook to ensure compliance with all provisions relating to amalgamation under the laws of Mauritius and to take necessary steps for striking off the names of the transferor companies in accordance with the Companies Act, Mauritius, 2001.

5. Objections raised by the Regional Director:
The Regional Director raised five objections:
(a) Non-compliance with filing requisite forms and fees for increasing authorized share capital.
(b) Insufficient authorized share capital to allot shares to members of transferor companies.
(c) Non-compliance with Accounting Standard-14.
(d) Compliance with the laws of Mauritius for amalgamation.
(e) Dissolution of amalgamating companies without winding up.

The petitioner company responded to each objection, undertaking to comply with all statutory requirements and the laws of Mauritius. The Court noted that the Supreme Court of Mauritius had sanctioned the scheme, and there were no objections from the Registrar of Companies, Gujarat.

Conclusion:
The Court allowed the petition and sanctioned the scheme of amalgamation, subject to the petitioner company's compliance with the statutory provisions, Accounting Standard-14, and the laws of Mauritius. The petitioner company was directed to pay the fees of the learned Assistant Solicitor General of India, Mr. P.S. Champaneri, quantified at Rs. 7,500/-. The petition stands disposed of.