2016 (7) TMI 410 - HC - Companies Law

Demerger scheme is not prejudicial to the interest of any person or entity, which has a stake/interest in the petitioner companies. The said scheme as framed is not violative of any statutory provisions. The scheme as formulated is fair, just, sound and is not contrary to any public policy or public interest. No proceedings appear to be pending under the provisions of Sections 231 to 237 of the Companies Act, 1956. All the statutory provisions appear to have been complied with.

Summary

Issues:
Company petitions under Sections 391 to 394 of the Companies Act, 1956 for sanctioning the scheme of arrangement (demerger) between the Demerged companies with the Resulting company.

Analysis:
1. Compliance with Formalities: The petitioner companies have complied with formalities under the Companies Act and Rules. Affidavits of equity shareholders consenting to the scheme are submitted.

2. Dispensation of Shareholders' Meeting: Court dispensed with the need for shareholder meetings for approval of the scheme for Demerged Companies and Resulting Company.

3. Board Resolutions: Board of Directors of all companies approved the scheme through separate resolutions on 24th July 2015.

4. Investigation Proceedings: Petitioners confirm no pending investigation proceedings under relevant sections of the Companies Act, 1956.

5. Amendment of Scheme: Petitioners amended the scheme post-consent from equity shareholders, changing the Appointed Date from 1st April 2015 to 1st April 2016.

6. Regional Director's Report: Regional Director's report highlighted the need for amendments related to conversion of Public Limited Demerged companies to Private Ltd., and restructuring of paid-up capital.

7. Court's Consideration: Court addressed concerns raised by the Regional Director regarding the conversion and capital restructuring, citing precedents and compliance undertakings by petitioners.

8. Reduction in Share Capital: Court has the power to approve reduction in share capital under Section 391 of the Companies Act, ensuring no adverse impact on secured creditors.

9. Scheme Approval: Approval granted as the scheme is deemed fair, just, compliant with statutory provisions, and not prejudicial to any stakeholder's interests.

10. Order for Approval: Order approving the scheme of arrangement (demerger) between the companies with effect from 1st April 2016, subject to necessary amendments and filings.

11. Exemption Clarification: Order not construed as granting exemption from stamp duty, taxes, charges, permissions, or compliances as per relevant laws.

12. Legal Counsel Fee: Senior Central Government Standing Counsel entitled to a fee of ?5,000 from the Demerged company.

13. Disposition: The petitions are disposed of in accordance with the terms outlined in the judgment.