2012 (11) TMI 264 - HC - Companies Law

Scheme of Arrangement - Held that - The Official Liquidator in his report has stated that the authorized share capital of the Transferor Companies shall be merged and added to the authorized share capital of the Transferee Company. Also that no complaint has been received against the proposed Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Transferor Company No. 1 & 2 do not appear to have been conducted in a manner prejudicial to the interest of its members or to public interest as per the second proviso of Section 394(1) of the Companies Act, 1956. MCA has filed his Affidavit that all the employees of the Transferor Companies shall become the employees of the Transferee Company without any break or interruption in their services upon sanctioning of the Scheme by the Court. The Scheme provide the Accounting Treatment in detail, which is in accordance with Accounting Standard issued by the Institute of Chartered Accountants of India. As the Transferor Company is a non-banking finance company and registered with the Reserve Bank of India it needs to inform Reserve Bank of India within 1(one) month from the date of order of court about amalgamation. No objection has been received to the, Scheme from any other party,thus sanction is hereby granted to the Scheme under Sections 391 and 394 of the Act with a direction to comply with all the statutory instructions as directed - this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law.

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391(2) and 394 of the Companies Act, 1956.
2. Share exchange ratio determination.
3. Compliance with statutory requirements and informing the Reserve Bank of India.
4. Transfer of undertaking, properties, rights, and powers to the Transferee Company.
5. Dissolution of Transferor Company without winding up.
6. Deposit of a sum with the Common Pool fund of the Official Liquidator.

Analysis:

1. The judgment pertains to a second motion joint Petition filed under Sections 391(2) and 394 of the Companies Act, 1956, seeking the sanction of the Scheme of Amalgamation involving three companies - two Transferor Companies and one Transferee Company. The registered offices of all the companies are located within the jurisdiction of the Delhi High Court.

2. The Petition includes detailed information regarding the incorporation dates, authorized, issued, subscribed, and paid-up capital of the companies, along with the submission of relevant documents such as Memorandum and Articles of Association and the latest audited Annual Accounts. Resolutions approving the Scheme have also been provided.

3. The share exchange ratio for the Amalgamation Scheme has been outlined, specifying the issuance of shares by the Transferee Company to the Transferor Companies based on the agreed ratios. A Share Valuation Report certifying the Fair Exchange Ratio has been submitted as well.

4. The Court had previously dispensed with the requirement of convening meetings of shareholders and creditors for the companies. The Official Liquidator's report confirmed no pending proceedings under specific sections of the Act against the Petitioner Companies, and no complaints received against the proposed Scheme.

5. The Regional Director's Affidavit highlighted the seamless transfer of employees to the Transferee Company and compliance with Accounting Standards. Additionally, the obligations related to informing the Reserve Bank of India post-amalgamation were addressed.

6. With no objections received from any party, including the Regional Director and the Official Liquidator, the Court granted sanction to the Scheme under Sections 391 and 394 of the Act. The judgment outlined the transfer of assets, liabilities, and the dissolution of the Transferor Company upon the Scheme coming into effect.

7. The judgment also specified the compliance requirements, including informing the Reserve Bank of India and filing a certified copy of the order with the Registrar of Companies. It clarified that the order did not exempt the companies from statutory duties or charges.

8. Lastly, the Petitioner Companies agreed to deposit a sum with the Common Pool fund of the Official Liquidator, and the Petition was allowed accordingly.

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