2021 (1) TMI 1192 - Tri - Companies Law

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

Issues Involved:
1. Approval of the Scheme of Merger by Absorption.
2. Dispensation of meetings for equity shareholders and creditors.
3. Convening of meeting for unsecured creditors.
4. Issuance of notices and advertisements for the meeting.
5. Appointment and powers of the Chairperson and Scrutinizer.
6. Reporting and compliance with statutory requirements.

Detailed Analysis:

1. Approval of the Scheme of Merger by Absorption:
The Applicant Companies submitted that the Board of Directors of all the Applicant Companies unanimously approved the draft Scheme of Merger by Absorption of the Transferor Company with the Transferee Company. The entire undertaking of the Transferor Company, including all assets and liabilities, is proposed to be transferred to and vested in the Transferee Company. The rationale for the scheme includes the benefits of common management, consolidation of business strengths, financial strength, reduction of costs, and improved corporate governance.

2. Dispensation of Meetings for Equity Shareholders and Creditors:
The Tribunal noted that the Applicant Transferor Company has three shareholders who have given their consents via affidavits. There are no secured or unsecured creditors for the Transferor Company as of 31 December 2019. Similarly, the Transferee Company has six equity shareholders who have also provided their consents via affidavits. Therefore, meetings of the equity shareholders of both companies are dispensed with.

3. Convening of Meeting for Unsecured Creditors:
The Tribunal observed that the Transferee Company has twenty-eight unsecured creditors with an outstanding amount of ?10,12,496.55 as of 31 December 2019. Therefore, a meeting of the unsecured creditors is required to be convened. The meeting is scheduled to be held at the registered office of the Transferee Company on 15 March 2021 at 11:00 AM, or soon thereafter but not later than 19 March 2021.

4. Issuance of Notices and Advertisements for the Meeting:
The Tribunal directed that at least one month before the date of the meeting, a notice in Form No. CAA 2, along with a copy of the Scheme of Arrangement, Explanatory Statement, and Form of Proxy, shall be sent to each of the unsecured creditors of the Transferee Company. Additionally, an advertisement about the meeting shall be published in the English Daily 'The Assam Tribune' and Assamese Daily 'Dainik Asom'.

5. Appointment and Powers of the Chairperson and Scrutinizer:
Mrs. Usha Daga, Director of the Transferee Company, is appointed as the Chairperson for the meeting of unsecured creditors. She is authorized to appoint a suitable person as the scrutinizer for the meeting. The Chairperson is empowered to issue advertisements, send out notices, and decide any procedural questions that may arise at the meeting.

6. Reporting and Compliance with Statutory Requirements:
The Tribunal directed that the Chairperson shall file an affidavit at least seven days before the proposed date of the meeting, confirming that the directions for issuance of notice and advertisement have been properly followed. The Chairperson shall also report the result of the meeting within fifteen days from its conclusion. The Applicant Companies are required to send a Notice of Meeting in Form No. CAA 3, along with the Scheme of Arrangement and Explanatory Statement, to various statutory authorities, including the Central Government, Registrar of Companies, Income Tax Authorities, and Official Liquidator. Representations from these authorities, if any, should be made within thirty days from the date of receipt of such notice.

Conclusion:
The Tribunal allowed the company applications and directed the necessary procedural steps for the proposed Scheme of Merger by Absorption, including the dispensation of shareholder meetings, convening of unsecured creditor meetings, issuance of notices and advertisements, and compliance with statutory requirements.

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