2018 (9) TMI 2041 - Tri - Companies Law

Approval of Scheme of amalgamation - seeking appropriate orders/direction for calling and convening meetings and for dispensing with some of the meetings - Section 230-232 of the Companies Act, 2013 read with Rule 3 of the Companies (Compromises, Arrangements Amalgamations) Rules, 2016 - HELD THAT - Various directions are issued with respect to calling, convening and holding of meetings of shareholders, secured and unsecured creditor and dispensing with the same as well as issue of notices including by way of paper publication - this First Motion Petition stands disposed of.

Summary

Issues Involved:
1. Amalgamation of Companies
2. Approval of Scheme of Arrangement
3. Dispensation of Meetings
4. Compliance with Legal Provisions
5. Reduction of Share Capital
6. Regulatory Approvals
7. Calling and Convening Meetings

Issue-wise Detailed Analysis:

1. Amalgamation of Companies:
The case involves a joint First Motion Application for the amalgamation of Brooks Instrument India Private Limited (A-1 Company) and Bangalore Integrated System Solutions Private Limited (A-2 Company) with ITW India Private Limited (A-3 Company) under Sections 230-232 of the Companies Act, 2013. The Board of Directors of the applicant companies unanimously approved the Scheme of Arrangement.

2. Approval of Scheme of Arrangement:
The Scheme aims to simplify the holding structure through the consolidation of wholly-owned subsidiaries and reduce the paid-up share capital of shareholders holding less than 10 shares in the Transferee Company. The Scheme is expected to achieve various objectives, including enhancing the capability to expand, improving efficiency of operations, better administration, cost reduction, and seamless access to strong business relationships.

3. Dispensation of Meetings:
The applicants requested the dispensation of meetings for equity shareholders and secured creditors of A-1 and A-2 companies, and for unsecured creditors of A-3 company with debts less than ?50,000. The Tribunal directed the convening of meetings for unsecured creditors of A-1 and A-2 companies and for equity shareholders, secured creditors, and unsecured creditors of A-3 company.

4. Compliance with Legal Provisions:
The Tribunal noted that there were no pending proceedings for inspection or investigation under the Companies Act, 1956 or 2013, or any proceedings under SEBI/FEMA/IPC against the Applicant Companies or their directors. The Tribunal also required compliance with Section 68 of the Companies Act, 2013, regarding the buy-back of shares, and sought views from the Central Government or any objectors before taking a final decision.

5. Reduction of Share Capital:
The Scheme includes the reduction of the subscribed and paid-up share capital of the Transferee Company by canceling and extinguishing 31 equity shares held by minority shareholders, paying them a sum of ?21,60,088 per equity share, and bearing the dividend distribution tax as applicable. The reduction of share capital is to be effected as an integral part of the Scheme.

6. Regulatory Approvals:
The Tribunal directed that notices be sent to statutory authorities, including the Reserve Bank of India and the Department of Scientific and Industrial Research (DSIR), as the holding company is foreign-based, and the approval of DSIR is required for the transfer of the Research and Development unit of A-2 Company to A-3 Company.

7. Calling and Convening Meetings:
The Tribunal issued detailed directions for calling, convening, and holding meetings of shareholders, secured creditors, and unsecured creditors of the applicant companies. The meetings are to be held at a specified venue on 17th and 18th November 2018. The Tribunal appointed a Chairperson, Alternate Chairperson, and Scrutinizer for the meetings and directed the applicant companies to ensure compliance with the applicable laws and regulations.

Conclusion:
The First Motion Petition for the amalgamation of the applicant companies was disposed of with specific directions for convening meetings and compliance with legal provisions. The Tribunal emphasized the need for regulatory approvals and compliance with Section 68 of the Companies Act, 2013, regarding the buy-back of shares. The Second Motion Petition will address the final adjudication of the Scheme, including the exit of minority shareholders.