2020 (7) TMI 763 - Tri - Companies Law

Approval of Scheme of Merger - sections 230 to 232 of the Companies Act, 2013 - HELD THAT - All necessary instructions regarding holding and convening of meeting duly complied with - necessary instructions were given regarding issuance and service of various notices - all fomalities to be complied with. The scheme is approved - application allowed.

Summary

Issues: Approval of Scheme of Merger under Companies Act, 2013

Analysis:
The judgment by the National Company Law Tribunal, Mumbai, involved the approval of a Scheme of Merger between two companies, namely Precious Trading and Investments Limited (Transferor Company) and Sheth Developers Private Limited (Transferee Company), along with their respective shareholders. The Scheme was presented under sections 230 to 232 of the Companies Act, 2013. The Transferor Company was engaged in investing in other companies, while the Transferee Company was involved in construction activities. The Board of Directors of both companies had approved the merger with the Appointed Date set as 1st April 2019. Meetings of the Equity Shareholders of both companies were scheduled to be held to consider and approve the proposed Scheme.

The judgment outlined detailed procedures for convening and conducting the Equity Shareholders' meetings, including the issuance of notices, publication in newspapers, appointment of Chairperson and Scrutinizer, quorum requirements, voting mechanisms, and proxy arrangements. It was specified that the Chairperson of the meetings would have the authority to decide on procedural matters and amendments to the Scheme, if necessary. Additionally, the judgment mandated the filing of an affidavit by the Chairperson before the meetings and reporting the results to the Tribunal within a specified timeframe.

Furthermore, the judgment addressed the requirements related to Preference Shareholders and Creditors of both companies. It was noted that the meeting of Preference Shareholders of the Transferee Company was dispensed with due to consent affidavits filed by both preference shareholders. As for Creditors, since there were no Secured Creditors for the Transferor Company, their meeting was not required. However, the Transferee Company was directed to notify its Secured and Unsecured Creditors to submit representations within a specified period.

Moreover, the judgment emphasized the importance of serving notices and copies of the Scheme to various authorities, including the Central Government, Registrar of Companies, Stock Exchange, SEBI, Real Estate Regulatory Authority, and Income Tax Authority. Compliance with these notifications and responses from the concerned authorities within stipulated timelines were crucial for the progression of the proposed Scheme. The judgment also highlighted the obligation of the Applicant Companies to host notices on their websites and file an affidavit of service of directions given by the Tribunal within a specified timeframe.

In conclusion, the judgment provided a comprehensive framework for the approval process of the Scheme of Merger under the Companies Act, 2013, ensuring adherence to legal requirements, transparency, and engagement with relevant stakeholders throughout the merger process.