2016 (5) TMI 1460 - HC - Companies Law

Scheme of Arrangement - demerger company - adherence to Quorum of the meeting - Held that - Requirement of obtaining the consents/no objections of the customers, joint development partners, tenants, vendors/brokers etc., as prayed for by the applicants, is dispensed with. In case the quorum as noted above for the above meetings is not present at the meetings, then the meetings shall be adjourned by half an hour, and thereafter the persons present and voting shall be deemed to constitute the quorum. For the purpose of computing the quorum the valid proxies shall also be considered, if the proxy in the prescribed form duly signed by the person entitled to attend and vote at the meetings is filed with the registered offices of the demerged and resulting companies at least 48 hours before the meetings. The Chairpersons and Alternate Chairpersons shall ensure that the proxy registers are properly maintained. The Chairpersons and Alternate Chairpersons shall ensure that notices for convening the aforesaid meetings of the equity shareholders, secured and unsecured creditors of the demerged and resulting companies, along with copies of the Scheme of Arrangement and the statement under Section 393 of the Companies Act, 1956, shall be sent to the equity shareholders, secured and unsecured creditors of the demerged and resulting companies by ordinary post at their registered or last known addresses at least 21 days before the date appointed for the meetings, in their presence or in the presence of their authorized representatives. Notice of the meetings shall also be published in the Delhi editions of the newspapers Business Standard (English) and (Hindi) editions in terms of the Companies (Court) Rules, 1959 at least 21 days before the date appointed for the meetings. The Chairpersons and Alternate Chairpersons will be at liberty to issue suitable directions to the management of the demerged and resulting companies so that the aforesaid meetings of the equity shareholders, secured and unsecured creditors of the demerged and resulting companies are conducted in a just, free and fair manner. The fee of the Chairpersons and the Alternate Chairpersons for the aforesaid meetings shall be ₹ 50,000/- each in addition to meeting their incidental expenses. The Chairpersons will file their reports within two weeks from the date of holding of the aforesaid meetings.

Issues Involved:
1. Convening meetings of shareholders, secured creditors, and unsecured creditors for approval of the Scheme of Arrangement.
2. Details of the demerged and resulting companies.
3. Share exchange ratio and its implications.
4. Pending proceedings under the Companies Act.
5. Approval of the Scheme by the Board of Directors.
6. Specific directions for conducting meetings.
7. Exemption for certain categories of creditors/liabilities from convening meetings.
8. Quorum requirements and procedures for adjourned meetings.
9. Notices and publication requirements for meetings.
10. Directions for conducting meetings in a fair manner.
11. Fees and report submission by Chairpersons and Alternate Chairpersons.

Detailed Analysis:

1. Convening Meetings of Shareholders, Secured Creditors, and Unsecured Creditors:
The joint application filed under Sections 391(1) and 394 read with Sections 100 to 104 of the Companies Act, 1956 seeks directions to convene meetings of shareholders, secured creditors, and unsecured creditors to consider and approve the proposed Scheme of Arrangement between Emaar MGF Land Limited (demerged company) and MGF Developments Limited (resulting company).

2. Details of the Demerged and Resulting Companies:
The registered offices of both companies are in New Delhi. The demerged company was incorporated on 18th February 2005, and the resulting company on 16th September 1996. The authorized share capital and issued, subscribed, and paid-up share capital of both companies are detailed, including the issuance of various debentures by the demerged company.

3. Share Exchange Ratio and Its Implications:
The Scheme provides that the resulting company shall issue and allot equity shares to the shareholders of the demerged company in the ratio of "09 equity shares of ?10/- each of the resulting company for every 416 equity shares of ?10/- each held by the shareholders in the demerged company."

4. Pending Proceedings Under the Companies Act:
It is submitted that no proceedings under Sections 235 to 251 of the Companies Act, 1956 or under the corresponding provisions of the Companies Act, 2013 are pending against the applicant companies.

5. Approval of the Scheme by the Board of Directors:
The Board of Directors of both companies unanimously approved the proposed Scheme of Arrangement in their separate meetings held on 11th May 2016. Copies of the Resolutions passed at these meetings have been placed on record.

6. Specific Directions for Conducting Meetings:
The court directed the convening of meetings for equity shareholders, secured creditors, and unsecured creditors of both companies on specified dates and times at designated venues. Chairpersons and Alternate Chairpersons were appointed to conduct these meetings, and quorum requirements were specified.

7. Exemption for Certain Categories of Creditors/Liabilities from Convening Meetings:
The court granted exemption for convening meetings of certain categories of creditors/liabilities, such as advance received from customers, joint development partners, maintenance deposits, and security deposits, as these advances and liabilities are not due for payment as on date. The court relied on previous judgments to support this exemption.

8. Quorum Requirements and Procedures for Adjourned Meetings:
If the quorum is not present at the meetings, they shall be adjourned by half an hour, and the persons present and voting shall be deemed to constitute the quorum. Valid proxies will also be considered for computing the quorum.

9. Notices and Publication Requirements for Meetings:
Notices for convening the meetings, along with copies of the Scheme of Arrangement and the statement under Section 393 of the Companies Act, 1956, shall be sent to the equity shareholders, secured and unsecured creditors by ordinary post at least 21 days before the meetings. Notices shall also be published in specified newspapers.

10. Directions for Conducting Meetings in a Fair Manner:
The Chairpersons and Alternate Chairpersons are authorized to issue suitable directions to ensure that the meetings are conducted in a just, free, and fair manner.

11. Fees and Report Submission by Chairpersons and Alternate Chairpersons:
The fee for the Chairpersons and Alternate Chairpersons is fixed at ?50,000/- each, in addition to meeting their incidental expenses. They are required to file their reports within two weeks from the date of the meetings.

Conclusion:
The application is allowed in the specified terms, and the court directs the necessary actions to convene and conduct the meetings for the approval of the proposed Scheme of Arrangement.

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