2022 (6) TMI 1457 - Tri - Companies Law

Approval for Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 - HELD THAT - After analysing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima fade beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In view of the absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Arrangement appended as Annexure D with the Company Petition as well as the prayer made therein. The Company Petition stands allowed.

Summary

Issues:
1. Approval of Scheme of Amalgamation by the Petitioner companies
2. First Motion Application seeking directions for conducting meetings
3. Rationale and benefits of the Scheme
4. Directions for notice to Statutory/Regulatory Authorities and publication
5. Compliance with directions and responses from Statutory Authorities
6. Reports and observations of Statutory Authorities
7. Valuation Report
8. Accounting Treatment
9. Tribunal's observations and approval of the Scheme
10. Orders issued by the Tribunal

Approval of Scheme of Amalgamation by the Petitioner companies:
The First Transferor Company, Second Transferor Company, and Transferee Company approved a Scheme of Amalgamation in a Board of Directors meeting. The Scheme aimed at simplifying the group structure, achieving operational efficiency, and reducing compliance obligations.

First Motion Application seeking directions for conducting meetings:
The Transferor and Transferee Companies filed a First Motion Application requesting directions for shareholder meetings. The Tribunal ordered meetings for shareholders and creditors, and subsequently, the second motion petition was filed for the Scheme's sanction.

Rationale and benefits of the Scheme:
The Scheme aimed to merge companies under the same management to enhance efficiency, streamline operations, and reduce administrative costs post-amalgamation.

Directions for notice to Statutory/Regulatory Authorities and publication:
The Tribunal directed the Petitioner Companies to notify various authorities and publish in specified newspapers. The companies complied with the directions by serving notices and publishing in Business Standard and Makkal Kural.

Compliance with directions and responses from Statutory Authorities:
Statutory Authorities like the Regional Director and Official Liquidator submitted reports supporting the Scheme. The Income Tax Department did not object, and other authorities did not raise any concerns.

Reports and observations of Statutory Authorities:
The Regional Director and Official Liquidator highlighted clauses in the Scheme related to share cancellations, dissolution of companies, and capital modifications. They found no prejudicial conduct and recommended auditor remuneration.

Valuation Report:
A Valuation Report indicated the exchange ratio for preference shares against equity shares in the Transferor Companies.

Accounting Treatment:
The Statutory Auditors confirmed compliance with accounting standards and endorsed the proposed Scheme's accounting treatment.

Tribunal's observations and approval of the Scheme:
After detailed analysis, the Tribunal found the Scheme beneficial and non-detrimental to shareholders. With statutory compliance fulfilled and no objections, the Tribunal sanctioned the Scheme.

Orders issued by the Tribunal:
The Tribunal ordered the transfer of assets, liabilities, employee continuity, share allotment, filing of revised documents, dissolution of Transferor Companies, and registration with the Registrar of Companies.

This comprehensive summary outlines the key aspects of the legal judgment, covering the approval process, compliance with statutory requirements, valuation, accounting treatment, and the Tribunal's final approval and orders.