2015 (3) TMI 240 - HC - Companies Law

Application for proposed Scheme of Amalgamation under Section 391 & 394 of the Companies Act, 1956 - Regional Director observation regarding absence of dissolution clause in scheme , compliance of AS-14 issued by ICAI with Section 2(43) of the Companies Act, 2013 , Computation of share exchange ratio and Appointment date - Affidavit submitted for compliance of observations Held that - In view of the approval accorded by the shareholders of the Petitioner Company, Representation/Report filed by the Official Liquidator and the Regional Director, Northern Region and the submissions of the Petitioner Company, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956. The Petitioner Company will comply with the statutory requirements in accordance with law. - Scheme of Amalgamation approved.

Issues:
1. Sanction of the Scheme of Amalgamation under sections 391 & 394 of the Companies Act, 1956.
2. Jurisdiction of the High Court over the Transferor and Transferee Companies.
3. Compliance with statutory requirements and provisions of the Companies Act.
4. Observations and objections raised by the Official Liquidator and Regional Director.
5. Valuation of shares and determination of share exchange ratio.
6. Appointed date for the Scheme of Amalgamation.
7. Undertakings and clarifications provided by the Petitioner Companies.
8. Grant of sanction to the Scheme of Amalgamation and subsequent actions.

Analysis:

1. The petition sought sanction for the Scheme of Amalgamation under sections 391 & 394 of the Companies Act, 1956, involving Adinath Food Private Limited as the Transferor Company and ICMC Corporation Limited as the Transferee Company. The Scheme, along with necessary documents, was presented to the Court.

2. The Transferor Company was based in New Delhi, falling under the jurisdiction of the High Court, while the Transferee Company was located in Chennai, outside the Court's jurisdiction, raising a jurisdictional issue.

3. Details regarding the Petitioner Company's incorporation, capital structure, and financial accounts were provided along with resolutions approving the Scheme, ensuring compliance with statutory requirements.

4. The Official Liquidator and Regional Director submitted reports and observations regarding the Scheme, including concerns about dissolution clauses, compliance with accounting standards, valuation of shares, and the appointed date for the Scheme.

5. The valuation of shares and determination of the share exchange ratio were scrutinized, with the Chartered Accountants' reports coming under review for clarity on the process followed.

6. Discussions arose regarding the appointed date for the Scheme, with suggestions to align it with the balance sheet period to avoid revisions and facilitate a smoother transition.

7. The Petitioner Companies provided undertakings to address concerns raised, including commitments to comply with accounting standards, share valuation, and post-appointed date financial assessments.

8. Considering shareholder approval, reports from the Official Liquidator and Regional Director, and the submissions made, the Court granted sanction to the Scheme of Amalgamation under sections 391-394 of the Companies Act, 1956, with instructions for compliance and dissolution of the Transferor Company.

This comprehensive analysis covers the key issues addressed in the judgment, detailing the legal proceedings and considerations leading to the final decision by the High Court.

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