2016 (2) TMI 757 - HC - Companies Law

Sanction of the Scheme of Amalgamation - Held that - The observations made by the Regional Director having been addressed and the Official Liquidator having opined that the affairs of the petitionerTransferor Company have not been conducted in a manner prejudicial to the interest of its members or to the public interest, in the view of this Court, there does not appear to be any impediment in granting sanction to the Scheme of Amalgamation. From the material on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and not in violation to any provisions of law or contrary to public policy. The amalgamation under the proposed Scheme appears to be in the interest of the companies and their members and creditors, therefore, the Scheme deserves to be sanctioned. Accordingly, the Scheme as proposed by the petitioner companies is hereby sanctioned. It is however, clarified that the sanctioning of this Scheme would not absolve the petitioners or anyone who is otherwise liable for any responsibility or liability, only on account of this sanctioning.

Summary

Issues:
1. Scheme of Amalgamation between two companies under Companies Act, 1956 and 2013.
2. Compliance with SEBI circulars, FEMA, RBI guidelines, and Income Tax Act.
3. Observations by Regional Director and Official Liquidator.
4. Sanction of the Scheme of Amalgamation.

Analysis:
1. The petitions were filed for the sanction of the Scheme of Amalgamation between two companies, one being a listed public limited company and the other an unlisted public limited company. The purpose of the Scheme was to enhance financial strength, shareholder value, operational efficiencies, and administrative control of the combined entity. The benefits of the Scheme were detailed in the petitions, emphasizing the positive outcomes expected from the amalgamation.

2. Compliance with regulatory requirements was a crucial aspect addressed in the judgment. The petitioner companies had already obtained necessary approvals from stock exchanges and shareholders. The Regional Director raised concerns regarding compliance with SEBI circulars, FEMA, RBI guidelines, and Income Tax Act. The petitioners assured adherence to SEBI circulars and rules, compliance with FEMA and RBI guidelines, and payment of necessary fees for name alteration and stamp duty. The High Court directed the companies to ensure compliance with these regulations.

3. The observations made by the Regional Director and Official Liquidator were thoroughly considered. The Regional Director highlighted the need for compliance with various regulations, while the Official Liquidator examined the affairs of the transferor company and recommended dissolution without winding up. The Court acknowledged these observations, ensuring preservation of books of accounts and records as per legal requirements.

4. After evaluating the Scheme, the Court found it fair, reasonable, and in the interest of the companies, members, and creditors. The Scheme was sanctioned, with a directive for payment of professional charges, costs, and lodging of necessary documents for stamp duty adjudication. The Court emphasized that the sanctioning of the Scheme did not absolve any party from liabilities. Additionally, instructions were given for filing the order with relevant authorities and maintaining copies for record-keeping purposes.