2016 (7) TMI 33 - HC - Companies Law

Scheme of Amalgamation - Held that - This court is of the view that that the observations made by the Regional Director, Ministry of Corporate Affairs, have been addressed satisfactorily and hence do not survive. No directions are required to be issued to the petitioner companies. This court is of the view that based on the material on record it can be concluded that the present Scheme of Amalgamation is in the interest of the shareholders and creditors of both the companies as well as in the public interest, therefore, the same deserves to be sanctioned and the same is hereby sanctioned.

Summary

Issues Involved:
1. Sanction of the Scheme of Amalgamation under sections 391 to 394 of the Companies Act, 1956.
2. Compliance with SEBI, FEMA, and RBI guidelines.
3. Approval from shareholders and creditors.
4. Observations from the Official Liquidator and Regional Director, Ministry of Corporate Affairs.
5. Preservation of books of accounts and statutory compliance post-amalgamation.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petitions were filed to obtain the sanction of the High Court for the amalgamation of two companies, Advanta Limited (Transferor Company) and UPL Limited (Transferee Company). The companies operate in the agriculture sector with complementary business activities. The amalgamation aims to provide synergic benefits and an end-to-end agri solution through a single entity. The scheme was proposed under sections 391 to 394 of the Companies Act, 1956.

2. Compliance with SEBI, FEMA, and RBI guidelines:
Both companies are listed on BSE and NSE. They obtained necessary approvals from stock exchanges and SEBI, complying with clause 24(f) of the listing agreement and SEBI circulars. The companies also addressed foreign shareholding compliance with FEMA and RBI guidelines, confirming no need for prior approval for share issuance post-amalgamation. They undertook to comply with all applicable provisions upon the scheme's effectiveness.

3. Approval from shareholders and creditors:
Separate meetings for equity shareholders of both companies were convened, and the scheme was unanimously approved. The approval process included e-voting and postal ballots, with the scheme receiving 99.99% and 99.27% approval from public shareholders of the Transferor and Transferee Companies, respectively. Meetings of secured and unsecured creditors were dispensed with, as their interests were not prejudicially affected. Consent letters from secured creditors were obtained and placed on record.

4. Observations from the Official Liquidator and Regional Director, Ministry of Corporate Affairs:
The Official Liquidator confirmed that the Transferor Company's affairs were conducted within its object clauses and not prejudicially to members or public interest. The court directed the preservation of books of accounts as per section 396(A) of the Companies Act, 1956. The scheme was amended to include all employees of the Transferor Company, not just permanent ones. The Regional Director's observations were addressed satisfactorily, confirming compliance with SEBI circulars, FEMA, RBI guidelines, and obtaining necessary regulatory approvals.

5. Preservation of books of accounts and statutory compliance post-amalgamation:
The court directed the Transferee Company to preserve the Transferor Company's books of accounts and comply with all statutory liabilities even after the scheme's sanction. The companies were instructed to file the order and scheme with the concerned Registrar of Companies and Superintendent of Stamps for stamp duty adjudication within 60 days.

Conclusion:
The court concluded that the Scheme of Amalgamation was in the interest of shareholders, creditors, and public interest. The scheme was sanctioned, and the petitions were disposed of accordingly. Costs were quantified for the Assistant Solicitor General and the Office of the Official Liquidator. The petitioner companies were directed to comply with the necessary filing and procedural requirements post-sanction.