2019 (5) TMI 1844 - Tri - Companies Law

Approval of Scheme of Merger (by Absorption) - section 230-232 of Companies Act - HELD THAT - Various directions regarding convening and holding of various meetings issued - various directions regarding issuance of various notices for above meetings, issued. Application allowed.

Summary

Issues Involved:
1. Scheme of Merger (by absorption) between two companies.
2. Convening meetings of Equity Shareholders.
3. Appointment of Scrutinizer for the meetings.
4. Compliance with statutory requirements for the merger process.
5. Direction to serve notices to various authorities and stakeholders.
6. Handling of Unsecured Creditors in the merger process.

Analysis:
1. Scheme of Merger: The judgment deals with a Scheme of Merger (by absorption) between two companies, referred to as the Transferor Company and the Transferee Company. The purpose is to merge the Transferor Company with the Transferee Company without winding up the former, in accordance with the relevant provisions of the Companies Act, 2013. The companies are part of the same group and seek to benefit from restructuring by simplifying the group structure, rationalizing administrative overheads, and improving administrative efficiency.

2. Meetings of Equity Shareholders: The judgment outlines the requirements for convening and conducting meetings of the Equity Shareholders of both Applicant Companies. Notices containing the proposed merger scheme and all relevant material facts must be sent to shareholders at least one month before the meetings. The meetings are to be chaired by designated individuals, and provisions for proxy voting and determination of share values are specified.

3. Appointment of Scrutinizer: A Practicing Company Secretary is appointed as a Scrutinizer for the Equity Shareholders' meetings. The Scrutinizer's role includes overseeing the voting process and ensuring its accuracy. The remuneration for the Scrutinizer is fixed, and the Chairman is directed to file an affidavit confirming compliance with meeting-related directions.

4. Compliance with Statutory Requirements: The judgment emphasizes compliance with statutory requirements under the Companies Act, 2013. This includes issuing notices, publishing advertisements, and serving copies of the scheme to relevant authorities such as Income Tax Authorities, the Central Government, and the Registrar of Companies.

5. Serving Notices to Authorities and Stakeholders: Specific directions are given to the Applicant Companies regarding serving notices to various authorities and stakeholders, including Income Tax Authorities, the Central Government, the Registrar of Companies, and the Official Liquidator. Compliance with these directions is crucial for the progression of the merger process.

6. Handling of Unsecured Creditors: The judgment addresses the need to notify Unsecured Creditors of both Applicant Companies about the proposed merger. Directions are provided for issuing notices to Unsecured Creditors, allowing them to submit representations to the Tribunal. The judgment ensures that all stakeholders, including creditors, are informed and given the opportunity to participate in the process.

By addressing these issues comprehensively and ensuring adherence to legal procedures, the judgment sets a clear framework for the merger process between the two companies, safeguarding the interests of all stakeholders involved.