2015 (8) TMI 138 - HC - Companies Law

Scheme of Amalgamation and Arrangement - Dispensing convening of meetings of equity shareholders and unsecured creditors to consider and approve, proposed Scheme of Amalgamation under Sections 391 to 394A of Companies Act, 1956 read with Rule 9 of Companies (Court) Rules, 1959 Held that - board of directors of transferor and transferee companies in their separate meetings unanimously approved proposed Scheme of Amalgamation 87 out of 92 equity shareholders of transferor company, being 98.95% in value and 324 out of 406 equity shareholders of transferee company, being 99.56% in value, have given their consents/no objections in writing to said proposed Scheme Direction issued upon Transferee company having 6200 unsecured creditors to hold meeting to seek their approval to proposed Scheme Application stands allowed Decided in favour of applicants.

Summary

Issues:
Application under Sections 391 to 394A of the Companies Act, 1956 seeking directions to dispense with meetings of equity shareholders and creditors for a proposed Scheme of Amalgamation and Arrangement between two companies.

Analysis:
The application filed under Sections 391 to 394A of the Companies Act, 1956, along with Rule 9 of the Companies (Court) Rules, 1959, pertains to dispensing with the requirement of convening meetings for equity shareholders and creditors regarding a proposed Scheme of Amalgamation and Arrangement between two companies. The applicant companies, the transferor and transferee companies, are seeking approval for the scheme without the need for physical meetings of their equity shareholders and creditors. The application highlights the background of both companies, their authorized share capital, and the proposed share exchange ratio for the amalgamation. It also mentions the unanimous approval of the scheme by the Board of Directors of both companies.

The application details the consents and no objections received from the equity shareholders of both companies. For the transferor company, 87 out of 92 equity shareholders have given their consent, while for the transferee company, 324 out of 406 equity shareholders have provided their consent. The application further states that there are no pending proceedings under Sections 235 to 251 of the Companies Act, 1956 against the applicant companies. Additionally, it mentions the absence of any secured creditors for the transferor company and the transferee company as of specific dates.

Regarding the unsecured creditors of the transferee company, the application seeks a direction to convene a meeting for their approval of the proposed scheme. It specifies the meeting date, location, appointment of Chairperson and Alternate Chairperson, and the quorum requirements for the creditors' meeting. Provisions for adjournment of the meeting, consideration of valid proxies, and the process for sending notices to unsecured creditors are also outlined in the application. The Chairperson and Alternate Chairperson are empowered to issue directions for the fair conduct of the creditors' meeting.

Lastly, the application addresses the remuneration of the Chairperson and Alternate Chairperson for conducting the meeting of unsecured creditors and sets a deadline for the Chairperson to file a report post-meeting. The judgment concludes by allowing the application in the specified terms, thereby facilitating the progression of the proposed Scheme of Amalgamation and Arrangement between the two companies.