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2017 (1) TMI 1301 - HC - Companies LawScheme of Arrangement and Demerger - Held that - The requirement of convening meeting of the Unsecured Creditor 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. The Transferee Company has seven equity shareholders. All the equity shareholders have given their written consents/NOCs to 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 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. The Transferee Company does not have any secured or unsecured creditors. In view of the circumstance that the requirement of convening meetings of the shareholders and creditors has been dispensed with, the requirement of publishing notices for meetings in newspapers is also dispensed with.
Issues:
Application under Sections 391 to 394 of the Companies Act, 1956 for a proposed Scheme of Arrangement and Demerger involving two companies. Analysis: The application was jointly filed by the Transferor Company and Transferee Company for a Scheme of Arrangement and Demerger under Sections 391 to 394 of the Companies Act, 1956. The Applicant Companies, Girnar Investment Limited (Transferor Company) and Suvrat Trading Co. Limited (Transferee Company), sought approval for the proposed scheme, which involved transferring the investment and financing business of the Transferor Company to the Transferee Company through a demerger process. The rationale behind the scheme was to enable a more focused business approach, efficient resource utilization, and to leverage assets and capital effectively for building sustainable businesses. The restructuring aimed to facilitate pursuing business plans more profitably and to realize the full potential in the financial sector. The demerger was deemed to be in the interest of shareholders and stakeholders, providing growth opportunities in the future. Regarding the Share Exchange ratio, it was proposed that upon the scheme's implementation, existing members of the Transferor Company would receive 50,000 Equity Shares of &8377; 10 each in the Transferee Company in proportion to their shareholding in the Transferor Company. Additionally, reserves equivalent to the book value of the demerged business would be transferred from the Transferor Company to the Transferee Company. The proposed scheme had been approved by the Board of Directors of both Applicant Companies in meetings held on 20.10.2016, and relevant documents, including financial statements, were filed and considered. The application detailed the status of shareholders and creditors of both companies, along with consents obtained for the proposed scheme. It was noted that all equity shareholders and the sole unsecured creditor of the Transferor Company, as well as all equity shareholders of the Transferee Company, had given their consents for the scheme. As a result, the requirement for convening meetings of shareholders and creditors was dispensed with. The application also sought dispensation of the requirement for publishing meeting notices in newspapers, which was granted based on the circumstances. Consequently, the application was allowed, and the scheme was approved and disposed of accordingly by the Court.
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