2011 (6) TMI 668 - HC - Companies Law

Scheme of amalgamation - board of directors of the transferor and transferee companies approved and adopted the scheme of amalgamation to transfer and merge the transferor company with the transferee company Held that - there is no material to come to a conclusion that the affairs of the transferor company have been conducted in a manner prejudicial to the interests of its members or to public interest or there were any transactions to attract the provisions of sections 542 and 543 of the Companies Act. company petitions are ordered, as the scheme of amalgamation will be for the benefit and interest of equity shareholders of the transferor and transferee companies

Issues:
1. Scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956.
2. Approval and adoption of the scheme by the board of directors.
3. Absence of secured creditors and investigations against the transferor company.
4. Objection by the Regional Director regarding the share capital issue.
5. Rejection of the objection based on legal precedent.
6. Report by the official liquidator on the conduct of the transferor company.
7. Dispensing with the meeting of equity shareholders for the transferee company.
8. Absence of investigations against the transferee company.
9. Order for the company petitions based on the benefits to equity shareholders.

Analysis:
1. The judgment pertains to company petitions filed by M/s. Lifesize Communications India (P.) Ltd., the transferor company, and M/s. Logitech Engineering and Designs India (P.) Ltd., the transferee company, seeking approval for a scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956.

2. Both the transferor and transferee companies' board of directors have approved and adopted the scheme of amalgamation to merge the transferor company with the transferee company. The court had previously dispensed with the requirement of convening equity shareholders' meetings for the transferor company.

3. The judgment notes the absence of secured creditors for the transferor company and confirms that no investigations are pending against the company under relevant sections of the Companies Act, ensuring that unsecured creditors are not prejudiced by the amalgamation scheme.

4. The Regional Director raised an objection regarding the treatment of authorized share capital post-amalgamation. However, the objection was rejected based on a legal precedent that clarified the intent of section 391 of the Companies Act in reconstituting companies without additional applications.

5. The official liquidator's report highlighted no prejudicial conduct in the affairs of the transferor company, ensuring compliance with the Companies Act's provisions and regulations.

6. The court further dispensed with the requirement of holding equity shareholders' meetings for the transferee company, considering no ongoing investigations against it under the Companies Act.

7. Ultimately, the judgment ordered the company petitions in favor of the amalgamation scheme, emphasizing the benefits and interests of equity shareholders from both the transferor and transferee companies.

← Previous Next →