2019 (5) TMI 1803 - Tri - Companies Law

Sanction of Composite Scheme of Merger by Absorption - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - Notices of various meetings to be served - the Applicant Companies to file Affidavit of service in the Registry proving dispatch of notices to regulatory authorities, notices to Creditors of the First, Second and Third Applicant Companies and publication of notice in newspapers.

Summary

Issues:
1. Composite Scheme of Merger by Absorption of wholly owned subsidiaries.
2. Approval and benefits of the proposed merger.
3. Shareholders' consent and dispensation of equity shareholders' meetings.
4. Convening meetings of Secured Creditors and Creditors.
5. Direction for serving notices to authorities and Official Liquidator.

Analysis:
1. The judgment pertains to a Composite Scheme of Merger by Absorption involving three Transferor Companies and one Transferee Company. The Scheme aims to merge wholly owned subsidiaries, each engaged in distinct business activities, into the holding company under the provisions of Sections 230 to 232 of the Companies Act, 2013. The Counsel for the Applicant Companies highlighted the nature of services provided by each entity, emphasizing the strategic benefits and synergies expected from the merger.

2. The Counsel further presented the benefits of the proposed merger, outlining how it would positively impact the companies, shareholders, creditors, employees, and stakeholders. The merger is expected to enhance business operations, create efficiencies, and streamline activities, ultimately leading to improved customer experiences and overall group efficiency. The approval of the Scheme by the Board of Directors and the Appointed Date were also discussed, underscoring the comprehensive planning and execution of the merger process.

3. Notably, the judgment addressed the shareholders' consent aspect, indicating that all equity shareholders of the Applicant Companies had provided consent affidavits, thereby dispensing with the need for equity shareholders' meetings. This streamlined approach ensured compliance with the necessary procedures and reflected the shareholders' agreement with the merger proposal.

4. Regarding the convening of meetings, it was clarified that since there were no Secured Creditors in the Applicant Companies, the question of convening meetings of Secured Creditors did not arise. Additionally, the judgment emphasized the need to issue notices to Creditors and directed the Applicant Companies to notify regulatory authorities and the Official Liquidator, ensuring transparency and adherence to legal requirements.

5. The judgment concluded with detailed directions for serving notices to various authorities, including Income Tax Authorities, the Central Government, Registrar of Companies, and the Official Liquidator. The Applicant Companies were instructed to file an Affidavit of service in the Registry to validate the dispatch of notices to regulatory bodies, creditors, and the publication of notices in newspapers, ensuring compliance with procedural formalities and regulatory obligations.