2015 (5) TMI 15 - HC - Companies Law

Application for Scheme of Amalgamation - Dispensation of meetings of their equity shareholders, secured and unsecured creditors - Held that - The transferor company has 03 equity shareholders and 01 unsecured creditor. All the equity shareholders and the only unsecured creditor have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferor company, as on 22nd January, 2015. The transferee company has 13 equity shareholders and 03 secured creditors. All the equity shareholders, in their extra-ordinary general meeting held on 21st January, 2015, and all the secured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and secured creditors of the transferee company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no unsecured creditor of the transferee company, as on 22nd January, 2015. - Application for scheme of Amalgamation approved.

Summary

Issues:
Application under Sections 391 and 394 of the Companies Act, 1956 for dispensing with the requirement of convening meetings of equity shareholders, secured and unsecured creditors to consider and approve the Scheme of Amalgamation.

Analysis:
The judgment pertains to a joint application under Sections 391 and 394 of the Companies Act, 1956 seeking directions to dispense with the need for convening meetings of equity shareholders, secured, and unsecured creditors for the proposed Scheme of Amalgamation between two companies. The transferor and transferee companies are both situated in New Delhi. The transferor company was originally incorporated in Rajasthan and later shifted its registered office to Delhi, while the transferee company was initially registered in Rajasthan and subsequently moved to Delhi. The share capital details of both companies were provided in the application, along with copies of their Memorandum and Articles of Association and audited balance sheets as of 31st March, 2014.

The Scheme of Amalgamation aims to merge the transferor company into the transferee company, claiming benefits such as reduction of overheads, operational rationalization, and economies of scale. It was highlighted that no shares of the transferee company would be allotted in exchange for the transferor company's holding, and the share capital of the transferor company would be cancelled upon the Scheme taking effect. The application confirmed the absence of pending proceedings under relevant sections of the Companies Act against the applicant companies.

Both the Board of Directors of the transferor and transferee companies have approved the proposed Scheme of Amalgamation in separate meetings. Consents or no objections in writing to the Scheme were obtained from all equity shareholders and the unsecured creditor of the transferor company, as well as from all equity shareholders and secured creditors of the transferee company. The consents were examined and found in order, leading to the dispensation of the requirement to convene meetings for approval. The judgment allowed the application in the stated terms, facilitating the amalgamation process between the two companies.