2020 (2) TMI 1333 - Tri - Companies Law

Sanction of Scheme of Arrangement - section 230 to 232 of Companies Act - HELD THAT - The Applicant Companies are directed to serve notices along with copy of scheme upon - (i) concerned Income Tax Authority within whose jurisdiction the Applicant Companies assessments are made i.e. for First Applicant Company Circle 1(1) Pune having PAN No AAACC7231Q and for Second Applicant Company Circle 1(1) Pune having PAN No AABCC7544B; (ii) the Central Government through the office of Regional Director Western Region Mumbai; (iii) Registrar of Companies Pune with a direction that they may submit their representations if any within a period of 30 (Thirty) days from the date of receipt of such notice to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Companies failing which it shall be presumed that the authorities have no representations to make on the proposals.

Summary

Issues:
1. Scheme of Arrangement between two companies for demerger.
2. Business activities of the Applicant Companies.
3. Rationale for the demerger.
4. Approval and Appointed Date of the Scheme.
5. Consent affidavits of Equity Shareholders.
6. Dispensing with Equity Shareholders' meeting.
7. Compliance with Companies Act, 2013 regarding Creditors' notice.
8. Directions for serving notices to authorities.
9. Filing affidavit of service for notices.

Analysis:
1. The judgment pertains to a Scheme of Arrangement between two companies, Clover Technologies Private Limited (Demerged Company) and Clover Infotech Private Limited (Resulting Company), for the demerger of the Business Undertaking of Clover Technologies into Clover Infotech. The scheme aims to benefit shareholders and allow independent growth strategies for each business.

2. The Applicant Companies are engaged in distinct business activities. Clover Technologies is involved in software-related services, trading in shares, and securities, while Clover Infotech focuses on software publishing, consultancy, and supply, encompassing various software-related services and custom software development.

3. The rationale for the demerger, as submitted by the Applicant Companies, includes unlocking value for shareholders, enabling independent growth strategies, and enhancing flexibility in accessing capital based on respective risk-return profiles and cash flows.

4. The Scheme has been duly approved by the board of directors of the Applicant Companies, with the Appointed Date set as 1st April, 2019, as per board resolutions dated 12th November, 2019.

5. Consent affidavits from all Equity Shareholders of both Applicant Companies have been provided, leading to the dispensation of Equity Shareholders' meetings for both companies.

6. The Scheme is characterized as an arrangement under section 230(1)(b) of the Companies Act, 2013, involving shareholders without any compromise or arrangement with secured or unsecured Creditors. Notice is directed to be given to all Creditors for representations to be submitted to the Tribunal.

7. Specific directions are issued for serving notices to relevant authorities, including Income Tax Authority, Central Government, and Registrar of Companies, with a 30-day period for submissions. Non-compliance implies no objections from the authorities.

8. The Applicant Companies are instructed to file an affidavit of service in the Registry to prove the dispatch of notices to creditors and regulatory authorities, ensuring compliance with the directions regarding the issuance of notices.