2019 (5) TMI 1842 - Tri - Companies Law

Sanction of Scheme of Amalgamation - section 230-232 of Companies Act, 2013 - HELD THAT - The Scheme of Amalgamation is sanctioned by this Tribunal so as to be binding with effect from 1st day of April, 2017 on the Transferor Companies and the Transferee Company and their Shareholders and all concerned. All the properties, interests, rights and powers of the Transferor Companies, are transferred to and vest without further act or deed in the Transferee Company and accordingly the same shall pursuant to Section 232 of the Companies Act, 2013 be transferred to and vest in the Transferee Company for all the estate and interest of the Transferor Companies but subject nevertheless to all charges, now affecting the same - All the debts, liabilities, duties and obligations of the Transferor Companies are transferred without further act or deed to the Transferee Company and accordingly the same shall pursuant to Section 232 of the Companies Act, 2013 be transferred to and become the debts, liabilities, duties, obligations of the Transferee Company. Application allowed.

Summary

Issues:
1. Sanction of Tribunal for Scheme of Amalgamation involving multiple companies.

Analysis:
The petition seeks approval from the Tribunal for the Scheme of Amalgamation involving four companies - three Transferor Companies and one Transferee Company. The Scheme aims to transfer the entire undertaking, including properties, rights, claims, and liabilities, of the Transferor Companies to the Transferee Company. The Transferor Companies and the Transferee Company share common management, shareholders, and directors, engaging in similar trading businesses. The integration is proposed to enhance business efficiency, streamline administration, and promote future growth and diversification.

The Scheme is anticipated to result in economies of scale, reduced overheads, administrative work, and better resource utilization. It is emphasized that the Scheme will benefit the companies, shareholders, employees, and all stakeholders involved. The Board of Directors of all companies have unanimously approved the Scheme, ensuring that it will not adversely affect any creditors' rights, with provisions made for timely payment of liabilities.

Moreover, it is confirmed that there are no pending legal proceedings against any of the companies under relevant sections of the Companies Act, and the Scheme does not involve capital reduction. The exchange ratio of shares has been determined fairly based on a Valuation Report by Chartered Accountants, ensuring compliance with accounting standards.

The Tribunal had previously dispensed with the requirement of convening meetings for shareholders and creditors of the companies, as all relevant parties had provided written consent. Necessary meetings were held for Unsecured Creditors of one of the companies, and reports were submitted accordingly. Affidavits were filed to evidence compliance with regulatory authorities and publication requirements.

The Regional Director's report highlighted minor objections regarding the Scheme, particularly related to the treatment of fractional shares. In response, the Petitioner Companies agreed to modify the relevant clause to address the concern. The Official Liquidator's report confirmed that the affairs of the Transferor Companies were conducted in the interest of their members and the public.

After considering all arguments and documents, and in the absence of objections, the Tribunal sanctioned the Scheme of Amalgamation. The order detailed the transfer of assets, liabilities, legal proceedings, dissolution of Transferor Companies, and registration requirements. Parties were directed to comply with the order within specified timelines, and interested persons were granted liberty to seek necessary directions from the Tribunal. The Company Petition was disposed of, and provision was made for urgent copies of the order to be supplied to the involved parties.