2019 (4) TMI 604 - Tri - Companies Law

Scheme of merger - HELD THAT - No objector has approached, neither to the Petitioner nor before Tribunal, to oppose this Scheme of Merger (by absorption). The Official Liquidator has filed his report stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and the Transferor Companies may be ordered to be dissolved without winding up. From the material on record, the Scheme of Merger (by absorption) appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy.

Summary

Issues Involved:
1. Scheme of Merger (by absorption)
2. Compliance with Sections 230 to 232 of the Companies Act, 2013
3. Approval by Board Resolutions and Shareholders
4. Benefits of the Scheme
5. Share Capital Details
6. Meetings of Equity Shareholders
7. No Issuance of Shares Post-Merger
8. Compliance with Tribunal Directions
9. Observations by Regional Director
10. No Objection to the Scheme
11. Official Liquidator’s Report
12. Tribunal’s Final Order

Detailed Analysis:

1. Scheme of Merger (by absorption):
The judgment involves the merger (by absorption) of Zeus Multitrade Private Limited (First Transferor Company) and Hexa Properties Private Limited (Second Transferor Company) with Agility Multitrade Private Limited (Transferee Company) and their respective shareholders. The sanction of the Tribunal is sought under sections 230 to 232 of the Companies Act, 2013.

2. Compliance with Sections 230 to 232 of the Companies Act, 2013:
The Tribunal's sanction is sought for the merger scheme under sections 230 to 232 of the Companies Act, 2013. The companies involved have complied with the necessary statutory requirements and filed affidavits of compliance.

3. Approval by Board Resolutions and Shareholders:
The Petitioner Companies approved the Scheme of Merger by passing Board Resolutions on 14th December 2017. Subsequently, meetings of Equity Shareholders were convened on 20th June 2018, where the scheme was approved unanimously by all equity shareholders.

4. Benefits of the Scheme:
The merger aims to maintain a simple corporate structure, eliminate duplicate corporate procedures, and consolidate operations for effective management and unified control. The benefits include greater financial strength, improved organizational capability, cost savings, synergy, and simplified group structure.

5. Share Capital Details:
The share capital details as of 31st March 2018 are as follows:
- First Transferor Company: Authorized capital of ?2,00,00,000, Issued and Paid-up capital of ?1,20,00,000.
- Second Transferor Company: Authorized capital of ?10,00,000, Issued and Paid-up capital of ?1,00,000.
- Transferee Company: Authorized, Issued, and Paid-up capital of ?3,00,00,000.

6. Meetings of Equity Shareholders:
Meetings of Equity Shareholders of the Petitioner Companies were convened on 20th June 2018, where the resolution for the scheme was approved unanimously by all equity shareholders.

7. No Issuance of Shares Post-Merger:
Clause 11 of the Scheme states that since the Transferor Companies are wholly owned subsidiaries of the Transferee Company, no shares will be issued to shareholders upon the merger, and the share capital of the Transferor Companies will stand canceled as of the effective date.

8. Compliance with Tribunal Directions:
The Petitioner Companies complied with all directions of the Tribunal and undertook to comply with all statutory requirements under the Companies Act, 2013.

9. Observations by Regional Director:
The Regional Director's report dated 28/11/2018 included several observations:
- Notices to concerned authorities under Section 230(5).
- Compliance with Accounting Standards AS-14 (IND AS-103) and other applicable standards.
- Undertaking that the scheme filed with the application and the petition is the same.
- Submission of admitted petition and minutes of the order.
- Effective date of the scheme as 1st April 2017.
- Fees payable by the Transferee Company on its Authorized Share Capital.
- Filing of e-form GNL-1 with ROC.

The Petitioner Companies addressed and complied with these observations.

10. No Objection to the Scheme:
No objections were raised by any parties or authorities against the Scheme of Merger.

11. Official Liquidator’s Report:
The Official Liquidator reported that the affairs of the Transferor Companies were conducted properly and recommended their dissolution without winding up.

12. Tribunal’s Final Order:
The Tribunal found the Scheme of Merger (by absorption) to be fair, reasonable, and not violative of any provisions of law or public policy. The Tribunal ordered the following:
- Lodging a copy of the order and the Scheme with the Superintendent of Stamps within 60 days.
- Filing a certified copy of the order with the Registrar of Companies within 30 days.
- Payment of costs of ?25,000/- each to the Regional Director and the Official Liquidator within four weeks.
- All authorities to act on the certified copy of the order.
- Liberty for any interested person to apply to the Tribunal for necessary directions.
- The Scheme is sanctioned with the appointed date fixed as 1st April 2017.

The Scheme of Merger (by absorption) is accordingly sanctioned.