2017 (1) TMI 1268 - HC - Companies Law

Scheme of amalgamation and arrangement - requirement of convening the meetings of the equity shareholders, secured creditors and unsecured creditors of the Transferor Company and Transferee Company - Held that - The proposed Scheme has been approved by the respective Board of Directors of the Applicant Companies, in their separate meetings held on 31.03.2016. Copies of the Resolutions passed at the meetings of the Board of Directors of the Applicant Companies have been placed on record. The Transferor Company has 05 (Five) Equity Shareholders and all the Equity Shareholders have given their written consents/NOCs to the implementation of the proposed Scheme. The said written consents/NOCs have been placed on record. The same have been examined and found in order. In view of the foregoing, the requirement of convening the meeting of the equity shareholders of the Transferor Company to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with. The Transferor Company does not have any secured creditors and therefore, the question of convening their meeting, does not arise. The Transferor Company has 03 (three) unsecured creditors and all of them have given their written consents/NOCs to the implementation of the proposed Scheme. The said written consents/NOCs have been placed on record. The same have been examined and found in order. In view of the foregoing, the requirement of convening the meeting of the unsecured creditors of the Transferor Company to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with. The Transferee Company has 02 (Two) Equity Shareholders and both Shareholders have given their written consents/NOCs to the implementation of the proposed Scheme. The said written consents/NOCs have been placed on record. The same have been examined and found in order. In view of the foregoing, the requirement of convening the meeting of the equity shareholders of the Transferee Company to consider and, if thought fit, approve, with or without modification, the proposed scheme is dispensed with.

Issues involved: Application under Sections 391 & 394 of the Companies Act, 1956 seeking directions to dispense with the requirement of convening meetings of equity shareholders, secured creditors, and unsecured creditors for the proposed scheme of amalgamation.

Analysis:
1. Application for directions under Sections 391 & 394 of the Companies Act, 1956: The joint application was filed by the Transferor Company and Transferee Company seeking directions to dispense with the need for convening meetings of equity shareholders, secured creditors, and unsecured creditors to consider and approve the proposed scheme of amalgamation. The purpose was to amalgamate the Transferor Company with the Transferee Company for various financial and operational benefits as outlined in the application.

2. Details of the Applicant Companies: The Transferor Company and Transferee Company collectively referred to as the Applicant Companies had their registered offices in the National Capital Territory of Delhi. The Transferor Company was incorporated in 2006, while the Transferee Company was incorporated in 2007, each with their respective share capital structures.

3. Salient features of the proposed Scheme: The proposed scheme included the amalgamation of the Transferor Company with the Transferee Company, transferring the business of the Transferor Company to the Transferee Company. The scheme aimed to provide financial strength, operational efficiency, and better resource utilization for the consolidated entity, benefiting the shareholders of both companies.

4. Share Exchange Ratio and Board approvals: The scheme specified the share exchange ratio for the shareholders of the Transferor Company, which was approved by the respective Board of Directors of both Applicant Companies in meetings held in 2016. The scheme also received written consents from all equity shareholders and unsecured creditors of both companies, eliminating the need for convening meetings of these stakeholders.

5. Dispensation of meetings for stakeholders: The judgment highlighted that due to the written consents obtained from all relevant stakeholders, including equity shareholders and unsecured creditors of both companies, the requirement of convening meetings of these stakeholders was dispensed with, ensuring compliance with the Companies Act, 1956.

6. Final decision and disposal of the application: Based on the examination of the consents and compliance with the legal requirements, the court allowed the application in the terms presented, disposing of the matter accordingly. The judgment concluded by granting the requested directions for dispensing with the meetings of equity shareholders and creditors, facilitating the proposed scheme of amalgamation between the Transferor and Transferee Companies.

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