2017 (2) TMI 80 - HC - Companies Law

Scheme of Amalgamation - Held that - Considering the approval accorded by the equity shareholders and creditors of the Petitioner Companies to the proposed scheme; the affidavit filed by the Regional Director, Northern Region and the report filed by the Official Liquidator, not raising any objection to the proposed scheme, there appears to be no impediment to the grant of sanction to the proposed scheme. Consequently, sanction is hereby granted to the proposed scheme. The Petitioner Companies will comply with the statutory requirements in accordance with law. Upon the sanction becoming effective from the Appointed Date of the proposed scheme, i.e. 1st April, 2015, the Transferor Company shall stand dissolved without undergoing the process of winding up. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Court to the proposed scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the Petitioner Companies.

Summary

Issues:
1. Petition filed under Sections 391 to 394 of the Companies Act, 1956 seeking sanction for the proposed scheme of Amalgamation.
2. Approval of the share exchange ratio and resolutions by the Board of Directors of both companies.
3. Dispensing with the requirement of convening meetings of equity shareholders and creditors.
4. Notice issuance and compliance with publication requirements.
5. Reports from the Official Liquidator and Regional Director not objecting to the proposed scheme.
6. Grant of sanction to the proposed scheme and compliance with statutory requirements.
7. Dissolution of the Transferor Company without winding up.
8. Clarification on potential deficiencies or violations and exemption from stamp duty or taxes.
9. Filing of a certified copy of the order with the Registrar of Companies.
10. Payment of costs to the Delhi High Court Bar Association Lawyers' Social Security and Welfare Fund.

Analysis:

1. The petition was filed under Sections 391 to 394 of the Companies Act, 1956 for the sanction of a proposed scheme of Amalgamation between the Transferor Company and the Transferee Company. Both companies collectively sought approval for the scheme, emphasizing benefits such as a focused approach towards customers, cost reduction, and pooling of financial resources for future growth opportunities.

2. The share exchange ratio was established in the proposed scheme, where the Transferee Company would issue fully paid-up equity shares to the shareholders of the Transferor Company at a specified ratio. Resolutions approving the scheme were passed unanimously by the Board of Directors of both companies in separate meetings.

3. The court had previously allowed the dispensation of the requirement to convene meetings of equity shareholders and unsecured creditors, as there were no secured creditors. This decision was made after a joint application by the Petitioner Companies.

4. Notice issuance and compliance with publication requirements were meticulously followed, including publication in newspapers, notice on relevant websites, and service to the Official Liquidator and Regional Director.

5. Reports from the Official Liquidator and Regional Director indicated no objections to the proposed scheme, ensuring that the affairs of the companies were not conducted in a manner prejudicial to the interest of members or public interest.

6. Granting sanction to the proposed scheme, the court emphasized compliance with statutory requirements and the effective date of dissolution for the Transferor Company without undergoing the winding-up process.

7. Any deficiencies or violations found would not impede subsequent legal actions against involved persons, directors, or officials, albeit in accordance with the law. The order did not grant exemption from stamp duty, taxes, or other charges.

8. The companies were directed to file a certified copy of the order with the Registrar of Companies and deposit a specified sum as costs with the Delhi High Court Bar Association Lawyers' Social Security and Welfare Fund within a stipulated timeframe.

9. The petition was allowed in the specified terms, and the case was accordingly disposed of, ensuring the completion of the amalgamation process and necessary legal formalities.