2020 (7) TMI 783 - Tri - Companies Law

Composite Scheme of Arrangement - Section 230-232 of Companies Act - HELD THAT - Various directions regarding holding, convening and dispensation of various meetings issued - directions regarding issuance of various notices also issued. The scheme is approved - application allowed.

Summary

Issues:
1. Approval of Composite Scheme of Arrangement between two companies and their shareholders.
2. Convening meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors for approval of the proposed Scheme.
3. Appointment of Chairpersons and Scrutinizers for the meetings.
4. Quorum requirements for different types of meetings.
5. Proxy voting and authorization procedures.
6. Determination of share value and number for each member.
7. Serving notices to regulatory authorities and obtaining responses.
8. Reporting the meeting results to the Tribunal.
9. Filing compliance report with the registry.

Analysis:
1. The judgment pertains to the approval of a Composite Scheme of Arrangement between two companies, Essential Power Transmission Pvt. Ltd. (Demerged Company) and Esenpro Power Transmission Private Limited (Resulting Company), along with their respective shareholders. The Board of Directors of both companies approved the scheme in meetings held on 21st February 2020.

2. Meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors need to be convened for the purpose of considering and approving the proposed Scheme. Specific dates, times, and locations for these meetings have been outlined, along with the requirement to send notices, explanatory statements, and proxy forms to the concerned parties at least 30 days before the meetings.

3. Chairpersons and Scrutinizers have been appointed for the meetings. The Chairpersons have been granted powers under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, to conduct the meetings effectively, decide procedural questions, and handle any amendments to the Scheme proposed during the meetings.

4. Quorum requirements have been specified for the different types of meetings. The quorum for Equity Shareholders is prescribed under section 103 of the Companies Act, 2013. In the case of Secured Creditors, the quorum is one, as there is only one secured Creditor in Applicant Company No. 1.

5. Proxy voting and authorization procedures have been outlined, allowing voting by proxy or authorized representatives, subject to the submission of the required forms within the stipulated time frame.

6. The determination of share value and number for each member will be based on the books/register of the Applicant Companies or depository records. In case of disputes, the Chairperson of the meeting will make the final decision on the valuation.

7. The judgment emphasizes the importance of serving notices to regulatory authorities such as the Regional Director, Registrar of Companies, and Income Tax Authority, and obtaining responses within 30 days. The absence of objections from these authorities will be presumed as no objection to the proposed Scheme.

8. The Chairpersons are required to report the meeting results to the Tribunal within fifteen days of the conclusion of the meetings. These reports must be verified by affidavit as per the relevant rules.

9. The Applicant Companies are directed to file a compliance report with the registry regarding the directions given in the Order, instead of the customary affidavit of service, due to the prevailing lockdown situation. This report should confirm the dispatch of notices to relevant Creditors and the service of notices to regulatory authorities as specified.