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2017 (7) TMI 875 - Tri - Companies LawScheme of Amalgamation - Held that - Transferee Company acquired 99.99% shares in the Petitioner Company and that the Petitioner Company became 100% subsidiary of Transferee Company. We have seen the affidavit / report of the Registrar of Companies Karnataka at Bengaluru. It is specifically stated in the affidavit that a notice was issued to the Income Tax Department but comments / objections were not received from the Income Tax Department. Further Registrar of Companies observed that Transferee Company to file balance sheet, profit and loss account and annual returns for the financial year ended 31.3.2015. The Petitioner Company has filed the balance sheet, profit and loss account and annual returns not only for the year ended 31.3.2015 but also for the year ended 31.3.2016. The Petitioner Company has complied the observations made by Registrar of Companies Karnataka at Bengaluru. However Transferee Company to file balance sheet, profit and loss account and annual returns before scheme is implemented. The Director of Transferor Company by name Jyosthna Shetty filed affidavit stating that Petitioner Company is not governed by any other regulatory authority and no need to give notice and that notices were issued to Regional Director, Official Liquidator, Registrar of Companies and Income Tax Assessing Officer. It is clear that the Petitioner Company is a wholly owned subsidiary of ACI Worldwide Solutions Private Limited the Transferee Company. There is no reorganisation of share capital under the scheme. Thus the scheme can be sanctioned at the instant of Petitioner Company even though no separate application is filed by the Transferee Company since the petition is a transferred petition from Hon ble High Court. Scheme allowed.
Issues Involved:
1. Sanction of the Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956. 2. Transfer and vesting of assets and liabilities. 3. Compliance with procedural requirements. 4. Exemption from filing a separate petition by the Transferee Company. 5. Tax implications and compliance with other legal requirements. Detailed Analysis: 1. Sanction of the Scheme of Amalgamation: The Company Petition was filed under Sections 391 to 394 of the Companies Act, 1956, for the sanction of the Scheme of Amalgamation. The Petitioner Company, ORCC Solutions Private Limited, proposed to merge with its parent company, ACI Worldwide Solutions Private Limited (Transferee Company). The Board of Directors of both companies approved the Scheme on September 8, 2015. The Scheme, if sanctioned, would take effect from April 1, 2015, and result in the dissolution of the Petitioner Company without winding up. 2. Transfer and Vesting of Assets and Liabilities: The Scheme provided that from the Appointed Date (April 1, 2015), the assets and liabilities of the Petitioner Company would be transferred to and vested in the Transferee Company. This includes all debts, liabilities, obligations, contracts, and employees of the Petitioner Company. The Petitioner Company would carry on its business on behalf of the Transferee Company from the Appointed Date. The Scheme also stipulated that the Petitioner Company would be deemed dissolved without the process of winding up. 3. Compliance with Procedural Requirements: The Hon'ble High Court of Karnataka had dispensed with the convening of meetings of shareholders and creditors of the Petitioner Company. Notices were issued to the Regional Director, Registrar of Companies, Official Liquidator, and Income Tax Department. The Official Liquidator appointed Chartered Accountants T. Gandhi and Co. to scrutinize the books of account of the Petitioner Company. The Chartered Accountants reported that the affairs of the Petitioner Company were not conducted in a manner prejudicial to the interests of members or the public. 4. Exemption from Filing a Separate Petition by the Transferee Company: The Learned Counsel for the Petitioner Company contended that since the Petitioner Company is a wholly-owned subsidiary of the Transferee Company, there was no need for the Transferee Company to file a separate petition for the sanction of the Scheme. This contention was supported by decisions from various High Courts, which held that when a wholly-owned subsidiary merges with its holding company without any reorganization of share capital, the holding company need not file a separate application. 5. Tax Implications and Compliance with Other Legal Requirements: The Tribunal clarified that the order should not be construed as granting exemption from payment of Stamp Duty, taxes, or any other charges. The tax implications arising out of the Scheme are subject to the final decision of the concerned Tax Authorities. The Transferee Company was directed to file the balance sheet, profit and loss account, and annual returns for the financial year ended March 31, 2015, before the Scheme is implemented. Conclusion: The Tribunal approved the Scheme of Amalgamation, transferring all property, rights, powers, liabilities, and obligations of the Petitioner Company to the Transferee Company. The Petitioner Company was directed to deliver a certified copy of the order and the Scheme to the Registrar of Companies within thirty days. The appointed date for the Scheme of Amalgamation is April 1, 2015. The Transferee Company must ensure payment of trade creditors' dues and comply with all tax and legal requirements. The Petitioner Company is to hand over its books of account and relevant documents to the Transferee Company after the completion of the Amalgamation process.
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