2019 (3) TMI 1832 - Tri - Companies Law

Approval of Scheme of Merger by Absorption - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. The scheme is sanctioned with certain directions issued.

Summary

Issues:
1. Sanction of a Scheme of Merger by Absorption under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and observations made by the Regional Director.
3. Approval and consideration of the Scheme by the Board of Directors and Equity Shareholders.
4. Transfer of liabilities, dissolution of Transferor Company, and procedural requirements post-sanction.

Analysis:
1. The Tribunal was approached for the sanction of a Scheme of Merger by Absorption between two companies engaged in trading agricultural commodities and pulses processing. The proposed merger aimed at achieving synergies in administration, marketing, and business operations, leading to cost savings, financial strengthening, and enhanced leveraging capacity. The Scheme also focused on avoiding duplication of efforts, streamlining management structures, and optimizing asset utilization.

2. The Petitioner Companies ensured compliance with all statutory requirements and filed necessary affidavits of compliance. The Regional Director's report highlighted certain observations related to serving notices to concerned authorities, compliance with accounting standards, submission of necessary documents, and adherence to FEMA guidelines for foreign shareholders. The Tribunal considered and accepted the clarifications and undertakings provided by the Petitioner Companies in response to the Regional Director's observations.

3. The Scheme was approved by the Board of Directors and Equity Shareholders of the companies, with the consideration for the merger being the exchange of equity shares. The Tribunal found the Scheme fair, reasonable, and compliant with legal provisions, directing the transfer of liabilities to the Transferee Company, dissolution of the Transferor Company post-merger, and fulfillment of procedural requirements such as stamp duty adjudication and filing with the Registrar of Companies.

4. The Tribunal ordered the Petitioner Companies to comply with the directives, pay specified costs to the Regional Director and Official Liquidator, and ensure timely lodging of documents for stamp duty adjudication and registration. The Scheme was sanctioned with the appointed date set as 1st April, 2018, allowing interested parties to seek further directions or modifications as necessary.

This comprehensive analysis covers the key legal aspects and procedural details of the judgment delivered by the National Company Law Tribunal, Mumbai Bench, regarding the sanction of the Scheme of Merger by Absorption under the Companies Act, 2013.