2017 (1) TMI 866 - HC - Companies Law

Scheme of Amalgamation - Held that - Considering the approval accorded by the equity shareholders and creditors of the Transferee Company to the proposed scheme and the affidavit filed by the Regional Director, Northern Region having not raised any objection to the proposed scheme, there appears to be no impediment to the grant of sanction to the proposed scheme. Consequently, subject to sanction of the proposed scheme from the Court of competent jurisdiction in respect of the Transferor Companies, sanction is hereby granted to the proposed scheme. The Transferee Company will comply with the statutory requirements in accordance with law. The sanction to the proposed scheme will be effective from the appointed date of the proposed scheme, i.e. 1st April, 2015.

Summary

Issues:
Petition filed under Sections 391(2) and 394 of the Companies Act, 1956 for sanction to the proposed scheme of Amalgamation involving three companies.

Analysis:
1. Jurisdiction and Background: The petition was filed by the Transferee Company seeking sanction for the proposed scheme of Amalgamation involving two Transferor Companies. The Transferee Company is situated in New Delhi, within the jurisdiction of the Delhi High Court. The Transferor Companies are located in Chandigarh and Ludhiana, Punjab, with a similar petition filed in the High Court of Punjab and Haryana. The Transferee Company was incorporated in 2004 and has a specified share capital structure.

2. Scheme Rationale and Share Exchange Ratio: The proposed scheme aims to consolidate the Transferor and Transferee Companies into a single entity for enhanced business synergy and efficiency. Various benefits of the amalgamation were outlined, including pooling of resources, economies of scale, enhanced shareholder value, and credit rating improvement. The share exchange ratio was detailed, specifying the issuance of equity shares by the Transferee Company to shareholders of the Transferor Companies.

3. Compliance and Approval: The petition highlighted compliance with statutory requirements, approval by respective Boards of Directors, and previous court directions regarding shareholder and creditor meetings. The Regional Director did not raise objections to the proposed scheme, and no objections were received from other parties. Equity shareholders and creditors had approved the scheme, further supporting the grant of sanction.

4. Grant of Sanction and Legal Clauses: The Court granted sanction to the proposed scheme, subject to approval from the competent jurisdiction for the Transferor Companies. The effective date of the scheme was set, and compliance with statutory requirements was mandated. The order emphasized that any deficiencies or violations would not impede legal actions against involved parties. Exemptions from stamp duty, taxes, or other charges were not granted, and a certified copy of the order was to be filed with the Registrar of Companies.

5. Costs and Disposal of Petition: The petition was allowed, subject to the payment of costs to the Delhi High Court Bar Association Lawyers Social Security and Welfare Fund. The order was disposed of, concluding the legal proceedings related to the Amalgamation scheme.