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2016 (6) TMI 139 - HC - Companies LawComposite Scheme of Arrangement - Held that - On consideration of all the relevant facts and the procedural requirements in terms of Section 391-394 of the Act and the relevant Rules and on due consideration of the reports of the Regional Director, Ministry of Corporate Affairs, New Delhi and the Official Liquidator, the Composite Scheme of Arrangement is hereby sanctioned and as a result thereto, the Assets and Liabilities of the Petitioner-Amalgamating Companies No.1 to 3 shall stand vested in Petitioner-Company No.4/Amalgamated Company/Demerged Company, and the Amalgamating Companies No.1 to 3 shall be dissolved without being wound up and Investment Business Undertaking of Petitioner-Company No.4/Amalgamated Company/Demerged Company shall demerge into Petitioner-Company No.5/Resulting Company and the Assets and Liabilities of Investment Business Undertaking of Petitioner-Company No.4/Amalgamated Company/Demerged Company shall stand vested in Petitioner-Company No.5/Resulting Company. The Petitioner-Companies shall be required to comply with the procedural requirement with regard to Accounting Standard 14 issued by the Institute of Chartered Accountants of India. The Composite Scheme of Arrangement shall be binding on the Petitioners-Companies, their respective Shareholders, Creditors and all concerned.
Issues:
Sanctioning of 'Composite Scheme of Arrangement' under Sections 391 to 394 of the Companies Act, 1956. Analysis: The petitioners, comprising multiple companies, sought approval for a 'Composite Scheme of Arrangement' involving amalgamation and demerger. Meetings of shareholders and creditors were dispensed with by court order. Notices were duly issued and published as per requirements. The Official Liquidator confirmed no adverse impact on members, creditors, or public interest. However, the Regional Director raised concerns about the absence of a valuation report and the nature of the companies involved. The petitioners responded, justifying the absence of a valuation report and providing explanations supported by relevant documents. The Regional Director's queries were adequately addressed by the petitioners' authorized signatory, clarifying the swap ratio determination, regulatory exemptions, compliance with accounting standards, and employee interests safeguarded in the scheme. The petitioners confirmed no pending investigation proceedings under relevant sections of the Act. After considering all reports, procedural requirements, and relevant facts, the court sanctioned the Composite Scheme of Arrangement. The scheme involved the transfer of assets and liabilities among the companies, dissolution of some companies without winding up, and demerger of specific business undertakings. Compliance with Accounting Standard 14 was mandated. The sanctioned scheme was declared binding on the petitioners, their shareholders, creditors, and all concerned parties. The court directed the formal order of sanction to be drawn and filed with the Registrar of Companies within 30 days. Public notices were ordered for information and potential applications. The petitioners agreed to deposit a specified sum in the Common Pool Fund Account of the Official Liquidator voluntarily. The case was disposed of accordingly.
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