2015 (5) TMI 127 - HC - Companies Law

Application under Sections 391 and 394 of the Companies Act, 1956 read with Rules 6 & 9 of the Companies (Court) Rules, 1959 - Dispensation of convening the meetings of their equity shareholders, secured and unsecured creditors - Held that - All the equity shareholders & secured creditor of the transferor company and transferee company 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 meeting of the equity shareholders 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 unsecured creditor of the transferor & transferee company, as on 31st July, 2014. - The application approved.

Summary

Issues involved: Application under Sections 391 and 394 of the Companies Act, 1956 seeking directions to dispense with the requirement of convening meetings of equity shareholders, secured and unsecured creditors for the proposed Scheme of Amalgamation.

Analysis:
1. Background and Jurisdiction: The joint application filed under Sections 391 and 394 of the Companies Act, 1956 seeks directions to dispense with the requirement of convening meetings for the proposed Scheme of Amalgamation between two companies, the transferor, and the transferee. Both companies are located in New Delhi, within the jurisdiction of the Delhi High Court.

2. Company Details: The transferor company was incorporated in 2009, while the transferee company was incorporated in 1996 under the Companies Act, 1956. The authorized and paid-up share capital of both companies is specified in the application.

3. Scheme of Amalgamation: The application includes the Memorandum and Articles of Association of both companies, audited balance sheets, and the Scheme of Amalgamation. The Scheme aims to create a larger company with increased resources, capital base, and fundraising capacity for business expansion and development, claiming benefits like economies of scale and reduced expenses.

4. Share Exchange Ratio: The Scheme outlines the share exchange ratio, stating that the transferee company will issue one equity share for every four held in the transferor company upon the Scheme's implementation.

5. Compliance and Resolutions: The application confirms that no pending proceedings under relevant sections of the Companies Act, 1956 exist against the applicant companies. Both the Board of Directors of the transferor and transferee companies have approved the Scheme in separate meetings. Shareholders and creditors of both companies have provided written consents or no objections to the proposed Amalgamation, with records of their approvals submitted and found in order.

6. Dispensation of Meetings: Due to the unanimous consents received from all equity shareholders and the sole secured creditor of the transferor and transferee companies, the requirement for convening meetings of these stakeholders to approve the Scheme is dispensed with. There are no unsecured creditors for the transferee company. Consequently, the application is allowed based on the provided details and consents from all relevant parties involved in the Amalgamation process.