2021 (1) TMI 1144 - Tri - Companies Law

Scheme of Amalgamation by way of Merger by Absorption - Sections 230-232 of the Companies Act, 2013 - HELD THAT - Various directions regarding holding convening and dispensation of various meetings issued - directions regarding issuance of various notices issued. The scheme is approved - application allowed.

Summary

Issues Involved:
1. Application under Sections 230-232 of the Companies Act, 2013.
2. Scheme of Amalgamation by way of Merger by Absorption.
3. Dispensation of meetings for equity shareholders, secured creditor, and unsecured creditors.
4. Compliance with procedural requirements and notifications to relevant authorities.

Issue-wise Detailed Analysis:

1. Application under Sections 230-232 of the Companies Act, 2013:
The Applicant Company filed a Company Scheme Application under Sections 230-232 of the Companies Act, 2013, seeking directions from the Tribunal regarding the convening and holding of meetings of the equity shareholders, sole secured creditor, and unsecured creditors concerning the Scheme of Amalgamation by way of Merger by Absorption between the Transferor Company and the Applicant Company.

2. Scheme of Amalgamation by way of Merger by Absorption:
The Scheme involves the amalgamation of the Transferor Company (a wholly-owned subsidiary of the Applicant Company) with the Applicant Company, followed by the dissolution without winding up of the Transferor Company and the cancellation of its equity shares held by the Applicant Company. The objectives include reducing the number of operating entities, gaining market entry, consolidating revenue and profits, standardizing internal policies, extending branding and sales promotion activities, optimizing manpower costs, and achieving full accounting consolidation.

3. Dispensation of Meetings for Equity Shareholders, Secured Creditor, and Unsecured Creditors:
- Equity Shareholders: The Applicant Company has 7 equity shareholders who hold the entire share capital. All shareholders provided affidavits of consent and approval for the Scheme. Therefore, the Tribunal dispensed with the requirement of convening and holding meetings of the equity shareholders.
- Secured Creditor: The Applicant Company has only one secured creditor, State Bank of India, with a negative outstanding amount as certified by an independent Chartered Accountant. The Tribunal waived the need for a meeting with the secured creditor, directing the Applicant Company to issue notice of the application and order to the secured creditor.
- Unsecured Creditors: The Applicant Company has 1119 unsecured creditors with an aggregate outstanding amount of INR 13,13,54,077. The Tribunal dispensed with the meeting requirement for unsecured creditors, directing the Applicant Company to notify them of the application and order, allowing them to submit representations within thirty days.

4. Compliance with Procedural Requirements and Notifications to Relevant Authorities:
- Central Government and Registrar of Companies: The Applicant Company is directed to serve notice of the application and order to the Central Government (through the Regional Director, Western Region) and the Registrar of Companies, Mumbai, Maharashtra, allowing them thirty days to submit representations.
- Income Tax Authority: Notice must also be served to the concerned Income Tax Authority, providing thirty days for representations.
- Competition Commission of India: Notice to the Competition Commission of India is not required.
- Official Liquidator: Notice to the Official Liquidator is not required as the Transferee Company will remain in existence post-sanction.
- Publication: The Applicant Company must publish the notice of the application in specified newspapers and on its website, allowing concerned persons thirty days to file representations.
- Affidavit of Service: The Applicant Company undertakes to file affidavits proving service of notices to the relevant authorities and publication in newspapers within ten days of service/publication.

The Tribunal's order ensures compliance with statutory requirements while facilitating the amalgamation process, considering the consents and approvals already obtained from the equity shareholders and the nature of the creditors involved.