2019 (9) TMI 1438 - Tri - Companies Law

Approval of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 - HELD THAT - Direction regarding convening and holding of various meetings issued - direction regarding issuance of various notices, also issued. Application allowed - scheme approved.

Summary

Issues Involved:
1. Scheme of Amalgamation
2. Board of Directors' Approval
3. Accounting Treatment
4. Investigation Proceedings
5. Shareholding Structure
6. Meetings of Equity Shareholders
7. Meetings of Unsecured Creditors
8. Notices and Advertisements
9. Chairperson and Scrutinizer Appointments
10. Voting Procedures
11. Quorum Requirements
12. Reporting and Affidavit Filings
13. Exemption from Meetings for Secured Creditors and Preference Shareholders
14. Notices to Regulatory Authorities
15. Appointment of Chartered Accountants

Detailed Analysis:

1. Scheme of Amalgamation:
The applications were filed under Sections 230 to 232 of the Companies Act, 2013, seeking directions for the Scheme of Amalgamation of Supreme Tradelinks Private Limited (Transferor Company) with Marks and Spencer Reliance India Private Limited (Transferee Company). The rationale includes combining businesses for administrative cost reduction, avoiding duplication, optimizing profitability, and enhancing shareholder value.

2. Board of Directors' Approval:
The Board of Directors of both Applicant Companies approved the Scheme of Amalgamation and the reduction of the Securities Premium Account of the Transferee Company in meetings held on 9th April 2019 and 10th April 2019, respectively.

3. Accounting Treatment:
The proposed accounting treatment in the Scheme conforms with the accounting standards under Section 133 of the Companies Act, 2013. A certificate from the Statutory Auditors of the Transferee Company dated 14th June 2019 supports this conformity.

4. Investigation Proceedings:
No investigation proceedings have been instituted or are pending against the Applicant Companies under various sections of the Companies Act, 2013, or the Companies Act, 1956. Additionally, no winding-up or insolvency petitions have been filed or are pending under relevant provisions.

5. Shareholding Structure:
The Transferor Company is a wholly owned subsidiary of the Transferee Company, with the entire Equity Share Capital held by the Transferee Company and its nominee shareholders. The Transferor Company has three shareholders.

6. Meetings of Equity Shareholders:
A meeting of the Equity Shareholders of the Transferor Company is ordered to be convened on 1st November 2019 for considering and approving the proposed Scheme of Amalgamation. Notices of the meeting, along with the Scheme and required statements, must be sent 30 days prior to the meeting.

7. Meetings of Unsecured Creditors:
A meeting of the Unsecured Creditors (including unsecured Debenture holders) of the Transferor Company is also ordered to be convened on 1st November 2019. Similar notice requirements apply as for the Equity Shareholders' meeting.

8. Notices and Advertisements:
Notices of the meetings must be published in two local newspapers, "Times of India" or "Business Standard" in English, and "Navshakti" in Marathi, 30 days before the meetings. Publication in the Government Gazette is dispensed with.

9. Chairperson and Scrutinizer Appointments:
Mr. K. Ganesan, Practicing Advocate, is appointed as the Chairperson for both meetings, with alternate Chairpersons appointed in case of his unavailability. Shri GBB Babuji, Practising Company Secretary, is appointed as the Scrutinizer, with an alternate appointed in case of his unavailability.

10. Voting Procedures:
Voting at the meetings shall be by poll. Proxies and authorized representatives are permitted to vote, provided the necessary forms are filed 48 hours before the meetings.

11. Quorum Requirements:
The quorum for both meetings is set at two members personally present.

12. Reporting and Affidavit Filings:
The Chairperson of the meetings must file an affidavit with the Tribunal at least seven days before the meetings, reporting compliance with notice and advertisement directions. The Chairperson must also report the meeting results within ten days of the meetings, verified by affidavit.

13. Exemption from Meetings for Secured Creditors and Preference Shareholders:
No meetings are required for Secured Creditors and Preference Shareholders of both companies as there are none.

14. Notices to Regulatory Authorities:
Applicant Companies must send notices with the Scheme and explanatory statements to the Central Government, Income Tax Authority, Registrar of Companies, and the Official Liquidator, allowing 30 days for representations.

15. Appointment of Chartered Accountants:
M/s. USM & Associates, Chartered Accountants, are appointed to assist the Official Liquidator in scrutinizing the Transferor Company's books. The fee for this service is fixed at ?60,000 excluding taxes.

The Tribunal's order comprehensively addresses the procedural, administrative, and compliance aspects necessary for the proposed Scheme of Amalgamation, ensuring adherence to legal requirements and facilitating stakeholder participation and transparency.