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2019 (9) TMI 1467 - Tri - Companies LawApproval of Amalgamation Scheme - Section 230 to 232 of the Companies Act, 2013 - HELD THAT - After hearing the Counsel for the Applicant Companies and considering the materials on record the Scheme appears to be fair, reasonable and is not detrimental against the Members or Creditors or contrary to public policy and the same can be approved. The scheme is approved - application allowed.
Issues Involved:
1. Sanction of the Scheme of Amalgamation. 2. Compliance with statutory requirements and observations by the Registrar of Companies (ROC) and Regional Director. 3. Related party transactions and compliance under Section 188 of the Companies Act, 2013. 4. Appointment of a whole-time Company Secretary and compliance with Section 203. 5. Compliance with Section 180(1)(c) regarding borrowing limits. 6. Payment of differential fees/stamp duty. 7. Confirmation of no requirement for Competition Commission of India's approval. Issue-wise Detailed Analysis: 1. Sanction of the Scheme of Amalgamation: The Company Petition was filed jointly by the Applicant Companies under Sections 230 to 232 of the Companies Act, 2013, praying for the sanction of the Scheme of Amalgamation. The Tribunal, after considering the materials on record, found the Scheme to be fair, reasonable, and not detrimental to the Members or Creditors or contrary to public policy. The Scheme was approved, subject to compliance with certain directions and conditions. 2. Compliance with Statutory Requirements and Observations by the ROC and Regional Director: The ROC and Regional Director made several observations regarding the Scheme. These included the need for an effective date, payment of differential fees/stamp duty, and compliance with the appointment of a whole-time Company Secretary. The Applicant Companies responded to these observations with undertakings and confirmations of compliance. The Tribunal directed the Applicant Companies to ensure compliance with these undertakings and submit periodic status reports. 3. Related Party Transactions and Compliance under Section 188 of the Companies Act, 2013: The Transferor Company had related party transactions during the years 2016-17 and 2017-18. The Applicant Companies confirmed that these transactions were conducted in the ordinary course of business, at arm's length, and were duly approved by the Board of Directors and Shareholders. The Tribunal required the Applicant Companies to ensure compliance with Section 188 before the approval of the Scheme. 4. Appointment of a Whole-time Company Secretary and Compliance with Section 203: The Transferee Company had delayed the appointment of a whole-time Company Secretary, which was eventually done on 29th July 2017. The Tribunal directed the Transferee Company to file an adjudication application for the period of default and adjudicate the offence under Section 203 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules. 5. Compliance with Section 180(1)(c) Regarding Borrowing Limits: The long-term loans of both the Transferor and Transferee Companies exceeded their paid-up capital and reserves. The Applicant Companies affirmed that they did not borrow funds in contravention of Section 180(1)(c) of the Companies Act, 2013. The Tribunal directed the Transferee Company to take corrective measures if any contravention was found. 6. Payment of Differential Fees/Stamp Duty: The Scheme mentioned that the Transferee Company would not be required to pay additional fees/stamp duty for the combined authorised capital. The Tribunal directed the Transferee Company to pay the differential fees, if any, after setting off the fees paid by the Transferor Company, in accordance with Section 232(3)(i) of the Companies Act, 2013. 7. Confirmation of No Requirement for Competition Commission of India's Approval: The Competition Commission of India requested an undertaking from the Companies involved that its approval was not required for the Scheme. The Applicant Companies filed affidavits stating that the proposed amalgamation did not amount to a Combination exceeding the threshold prescribed under Section 5 of the Competition Act, 2002, and hence, no approval was required. Tribunal's Orders: 1. The Scheme was approved, subject to compliance with the payment of Stamp Duty, taxes, and other charges. 2. The property, rights, and liabilities of the Transferor Company were transferred to the Transferee Company. 3. Compliance with Income Tax laws and the decision of the concerned tax authorities was mandated. 4. Pending proceedings by or against the Transferor Company were to continue by or against the Transferee Company. 5. Certified copies of the order and Scheme were to be delivered to the Registrar of Companies within thirty days. 6. Compliance with the undertakings provided in the Affidavit dated 11th September 2019 was required. 7. The appointed date for the Scheme was set as 1st April 2018. 8. The order did not grant any exemption from compliance with other legal requirements. The Tribunal directed the registry to provide a copy of the order to the Registrar of Companies, Karnataka.
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