2016 (8) TMI 1584 - HC - Companies Law

Seeking sanction of Scheme of Amalgamation of two Transferor Companies - section 391 to 394 of the Companies Act, 1956 - HELD THAT - The observations made by the Regional Director, Ministry of Corporate Affairs, do not survive - the present scheme of amalgamation is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. The Scheme is hereby sanctioned. Petition allowed.

Summary

Issues:
Petitions for sanction of a Scheme of Amalgamation under sections 391 to 394 of the Companies Act, 1956 involving three companies - Kaizen Stocktrade Private Limited, Kaizen Finstock Private Limited, and Kunvarji Fincorp Private Limited.

Analysis:
The petitions were filed seeking approval for the amalgamation of two Transferor Companies with the Transferee Company to streamline the organization structure and achieve commercial synergies. The Transferor Companies were engaged in similar commercial activities, while the Transferee Company was a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India. The consolidation was aimed at reducing operational and administrative costs for the benefit of the Transferee Company.

The meetings of shareholders and creditors of the Transferor Companies were dispensed with as written consent letters from all parties had been obtained. Similar dispensation was granted for the Equity Shareholders and Creditors of the Transferee Company based on positive net worth post-scheme. The petitions for sanction were admitted, and notices were published in newspapers and the Government gazette, with no objections received.

The Official Liquidator recommended dissolution of the Transferor Companies without winding up, subject to preserving books and records. The Central Government raised observations through the Regional Director, Ministry of Corporate Affairs, regarding various aspects of the scheme, including valuation, compliance with RBI rules, accounting treatment, and Income Tax compliance. The court considered all contentions, undertakings, and judgments, concluding that the scheme was in the interest of shareholders, creditors, and the public, and sanctioned the amalgamation.

Costs were quantified for the Central Government Standing Counsel and the Office of the Official Liquidator, payable by the Transferor Companies. Directions were given for stamp duty adjudication, filing with concerned authorities, and issuance of authenticated copies of the order and scheme. Filing and issuance of drawn-up order were dispensed with, and all authorities were directed to act promptly on the sanctioned scheme.