2018 (5) TMI 1860 - Tri - Companies Law

Scheme of Merger - HELD THAT - The Board of Directors of the First, Second and Third Applicant Companies, vide its resolution dated 14th December, 2017 approved the Scheme of Merger by Absorption of ZEUS MULTITRADE PRIVATE LIMITED (First Transferor Company) And HEXA PROPERTIES PRIVATE LIMITED (Second Transferor Company) With AGILITY MULTITRADEPRIVATE LIMITED (Transferee Company). Meeting of respective shareholders, creditors need to be adhered and informed accordingly.

Summary

Issues:
1. Scheme of Merger (by absorption) involving multiple companies.
2. Approval process for the merger scheme by shareholders and regulatory authorities.
3. Obligations towards creditors and regulatory authorities in the merger process.

Analysis:
1. The judgment pertains to a Scheme of Merger (by absorption) involving ZEUS MULTITRADE PRIVATE LIMITED, HEXA PROPERTIES PRIVATE LIMITED as Transferor Companies, and AGILITY MULTITRADE PRIVATE LIMITED as the Transferee Company. The rationale behind the merger is to simplify corporate structure, consolidate operations for effective management, and reduce administrative costs by eliminating duplicate procedures. The merger aims to unify control of operations and achieve economies of scale.

2. The Board of Directors of the Applicant Companies approved the merger scheme. Meetings of Equity Shareholders of each Applicant Company were scheduled to consider and approve the merger scheme. Notices, along with the scheme details, were to be sent to shareholders, published in newspapers, and shared with regulatory authorities as per legal requirements. The Chairman of the meetings was designated to oversee the process, including deciding procedural matters and ensuring compliance with the Companies Act, 2013.

3. The judgment also addressed the obligations towards creditors and regulatory authorities. While there were no Secured Creditors, Unsecured Creditors were to be notified, allowing them to submit representations to the Tribunal. Notices were to be served on Income Tax Authorities, Central Government offices, Registrar of Companies, and the Official Liquidator. Additionally, Chartered Accountants were appointed to assist the Official Liquidator in scrutinizing the books of accounts of the Applicant Companies. The Transferee Company was directed to pay fees for this service. Affidavits of service were required to be filed to demonstrate compliance with the notification requirements to stakeholders and regulatory bodies.