2014 (6) TMI 814 - HC - Companies Law

Dispensation from convening meetings of equity shareholders, preference shareholders - Scheme of Amalgamation - Held that - The Board of Directors, of the Transferee Company passed a resolution dated 20.12.2013 approving and adopting the Scheme of Amalgamation of Uniflair India Private Limited with Schneider Electric IT Business India Private Limited, subject to the sanction of this Court and that the assets of the Transferee Company are more than the liabilities and is stated to be financially sound. Hence, the amalgamation would not in any manner, affect the interests of the creditors of the Transferee Company - The convening of the meetings of the equity shareholders and preference shareholders of the Transferee Company are waived. The convening of the meeting of the equity shareholders of the Transferor Company is also waived. - Decided in favour of appellant.

Summary

Issues:
1. Scheme of Amalgamation between Transferee Company and Transferor Company.
2. Dispensation from convening meetings of equity shareholders and directions to convene meetings of unsecured creditors.

Analysis:
1. The Transferee Company, engaged in manufacturing inverters and associated products, sought amalgamation with the Transferor Company, involved in precision air conditioning systems. Both companies had the necessary share capital and board approvals for the merger as per their Memorandum of Association clauses permitting amalgamation.

2. The Transferor Company had passed a resolution for amalgamation subject to court sanction, stating no adverse impact on its unsecured creditors. Similarly, the Transferee Company, with a financially sound position and no secured loans, approved the merger, ensuring no harm to its creditors. Hence, the applications for dispensation from convening equity and preference shareholders' meetings were allowed.

3. The court directed the convening of a meeting for unsecured creditors of the Transferor Company, ensuring their interests are protected. The meeting was scheduled, and the chairman was designated. Simultaneously, a meeting for unsecured creditors of the Transferee Company was also set, with proper arrangements for notice publication, email communication, and proxy voting.

4. The judgment emphasized the importance of creditor participation and directed the filing of meeting reports promptly. Overall, the applications were allowed, ensuring compliance with legal procedures and safeguarding the rights of all stakeholders involved in the amalgamation process.