2016 (5) TMI 1423 - HC - Companies Law

Dispense with the requirement of convening the meetings of their equity shareholders and unsecured creditors and for convening the meetings of the secured creditors of the transferor company no. 1 and the transferee company to consider and approve, with or without modification, the proposed Scheme of Arrangement. Quorum need to be assured. The Chairpersons and Alternate Chairpersons shall ensure that the proxy registers are properly maintained. The Chairpersons and Alternate Chairpersons shall ensure that notices for convening the aforesaid meetings of the secured creditors of the transferor company no.1 and the transferee company, along with copies of the Scheme of Arrangement and the statement under Section 393 of the Companies Act, 1956, shall be sent to the secured creditors of the transferor company no.1 and the transferee company by registered post, courier as well by hand at their registered or last known addresses at least 21 days before the date appointed for the meetings, in their presence or in the presence of their authorized representatives.

Summary

Issues:
Application under Sections 391(1) and 394 read with Sections 100 to 104 of the Companies Act, 1956 for dispensing with the requirement of convening meetings of equity shareholders, unsecured creditors, and secured creditors to approve a Scheme of Arrangement.

Analysis:
The joint application sought directions to dispense with the need for meetings of equity shareholders and unsecured creditors of the applicant companies, while convening meetings of secured creditors to consider and approve a proposed Scheme of Arrangement. The registered offices of the involved companies are in New Delhi. The history and details of incorporation changes for the transferor company no. 1, transferor company no. 2, and the transferee company were provided, along with their current share capital structures. Memorandum and Articles of Association, audited balance sheets, and the Scheme of Arrangement were submitted for review.

The proposed demerger aims to merge Investment Businesses of the transferor companies into the transferee company and vice versa to simplify corporate structures and enhance resource management. Share exchange ratios were outlined in the Scheme for shareholders of the involved companies. The Board of Directors of all companies unanimously approved the Scheme. Consents from equity shareholders and creditors were obtained and recorded, leading to dispensation of certain meetings based on the level of consent received.

Meetings of secured creditors for both transferor and transferee companies were directed to seek approval for the Scheme of Arrangement. The need for publication of notices in newspapers was waived, opting for direct service to secured creditors. Quorum requirements and proxy considerations for the meetings were specified. Chairpersons were appointed for the meetings, with instructions to ensure fair conduct. Directions were given for sending notices and scheme details to secured creditors in advance.

Chairpersons were entitled to a fee and incidental expenses for conducting the meetings, with costs to be borne by the applicants. Reports from the Chairpersons were mandated within two weeks post-meetings. The application was allowed as per the outlined terms.