2016 (11) TMI 125 - HC - Companies Law

Scheme of arrangement in the nature of Amalgamation - Considering the approval accorded by the equity shareholders and creditors of the petitioner companies to the proposed Scheme of Arrangement and the affidavits filed by the Regional Director, Northern Region and the Official Liquidator having not raised any objection to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956.

Summary

Issues Involved:
1. Jurisdiction and incorporation details of the transferor and transferee companies.
2. Authorized and paid-up share capital of the transferor and transferee companies.
3. Salient features and benefits of the proposed Scheme of Arrangement.
4. Share exchange ratio under the Scheme.
5. Pending proceedings under the Companies Act.
6. Approval of the Scheme by the Board of Directors.
7. Dispensation of meetings for sanction of the Scheme.
8. Compliance with statutory requirements and publication of notices.
9. Observations and objections by the Official Liquidator and Regional Director.
10. Filing of balance sheets and compliance with NBFC regulations.
11. Absence of objections from other parties.
12. Sanction of the Scheme and compliance with statutory requirements.
13. Costs and expenses related to the petition.

Issue-wise Detailed Analysis:

1. Jurisdiction and Incorporation Details:
The registered offices of the transferor and transferee companies are situated in New Delhi, within the jurisdiction of this Court. The transferor companies were originally incorporated in West Bengal and subsequently shifted their registered offices to Delhi, obtaining necessary certificates from the Registrar of Companies, NCT of Delhi & Haryana. The transferee company was incorporated in New Delhi.

2. Authorized and Paid-up Share Capital:
The authorized and paid-up share capital of each transferor and transferee company was detailed, with figures ranging from ?1,00,000 to ?7,00,00,000 for authorized capital and from ?1,00,000 to ?5,03,47,000 for paid-up capital.

3. Salient Features and Benefits of the Proposed Scheme:
The Scheme of Arrangement aims to amalgamate the transferor companies with the transferee company, resulting in business synergy, pooling of resources, consolidation, elimination of duplicate work, reduction in overheads, better utilization of resources, and enhancement of overall business efficiency. The amalgamation will combine managerial and operating strengths, build a wider capital and financial base, and promote overall business growth.

4. Share Exchange Ratio:
The Scheme provides specific share exchange ratios for each transferor company, with the transferee company issuing and allotting equity shares to the shareholders of the transferor companies in ratios ranging from 1 equity share of ?100 for every 4 equity shares of ?10 to 1 equity share of ?100 for every 40 equity shares of ?10.

5. Pending Proceedings Under the Companies Act:
It was submitted that no proceedings under Sections 235 to 251 of the Companies Act, 1956 or corresponding provisions of the Companies Act, 2013 are pending against the petitioner companies.

6. Approval of the Scheme by the Board of Directors:
The Board of Directors of the transferor and transferee companies unanimously approved the proposed Scheme of Arrangement in meetings held on 13th June, 2015 and 12th September, 2015. Copies of the Resolutions were placed on record.

7. Dispensation of Meetings for Sanction of the Scheme:
The court dispensed with the requirement of convening meetings of equity shareholders and unsecured creditors of the transferor companies and equity shareholders, secured and unsecured creditors of the transferee company, as there were no secured creditors of the transferor companies.

8. Compliance with Statutory Requirements and Publication of Notices:
Notices were issued to the Regional Director, Northern Region, and the Official Liquidator, and citations were published in 'Business Standard' and 'Jansatta'. Affidavit of service was filed showing compliance with service and publication requirements.

9. Observations and Objections by the Official Liquidator and Regional Director:
The Official Liquidator reported no complaints against the Scheme and stated that the affairs of the transferor companies were not conducted prejudicially. The Regional Director had no objection subject to filing of due balance sheets and compliance with NBFC Rules. The Regional Director noted non-filing of certain balance sheets and potential NBFC activity by transferor companies.

10. Filing of Balance Sheets and Compliance with NBFC Regulations:
The transferee company filed its audited accounts, and the transferor companies undertook to file their accounts once forms were available. The transferor companies clarified they were not NBFCs, supported by certificates from Chartered Accountants, satisfying the Regional Director's observations.

11. Absence of Objections from Other Parties:
No objections were received from any other party, and affidavits confirmed no objections were received following publication of citations.

12. Sanction of the Scheme and Compliance with Statutory Requirements:
The court granted sanction to the Scheme under Sections 391 and 394 of the Companies Act, 1956. The petitioner companies were directed to comply with statutory requirements and file a certified copy of the order with the Registrar of Companies within 30 days. The order clarified it did not exempt payment of stamp duty.

13. Costs and Expenses Related to the Petition:
The petitioners were directed to pay costs of ?2,00,000 to the Delhi High Court Bar Association Lawyers Social Security and Welfare Fund, as agreed by the petitioners' counsel.

Conclusion:
The petition was allowed, and the Scheme of Arrangement was sanctioned in the specified terms.