2019 (8) TMI 749 - Tri - Companies Law

Directions of this Tribunal to convene separate meetings - Arrangement Scheme - applicants have stated that the accounting treatment proposed in the scheme of arrangement is inconformity with the Accounting Standards prescribed under section 133 of the Companies Act, 2013 - HELD THAT - In compliance with sub-section(5) of section 230 of the Act and rule 8 of the Companies (CAA) Rules, 2016, the applicant-companies shall send notice under sub-section (3) of section 230 read with rule 6 of the Rules with a copy of the scheme of arrangement, the explanatory statement and the disclosures mentioned in rule 6 to (a) the Central Government through the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi ; (b) the Registrar of companies, Uttarakhand ; and (c) the Income-tax Authorities. The said notices be sent either by registered post or by speed post or by courier or by hand delivery at the offices of the authorities as required by sub-rule (2) of rule 8 of the Rules. The aforesaid authorities, who desire to make any representation under sub-section (5) of section 230 shall send the same to this Tribunal within a period of 30 (thirty) days from the date of receipt of such notice, failing which it shall be deemed that they have no representation to make on the proposed scheme. Application disposed off.

Issues Involved:

1. Directions for convening separate meetings of shareholders and creditors.
2. Dispensation of meetings for certain shareholders and creditors.
3. Approval of the proposed scheme of arrangement.
4. Reorganization of share capital.
5. Compliance with statutory requirements.

Detailed Analysis:

1. Directions for Convening Separate Meetings:

The applicants sought directions to convene separate meetings of shareholders of the transferor company No. 1, secured creditors of transferor companies Nos. 2 and 10, and the transferee company, and unsecured creditors of transferor company No. 2 and the transferee company to consider and approve the proposed scheme of arrangement. The Tribunal directed these meetings to be held on March 29, 2019, at specified times and locations.

2. Dispensation of Meetings for Certain Shareholders and Creditors:

The applicants requested to dispense with the requirement of convening meetings of shareholders of transferor companies Nos. 2 to 10 and the transferee company, and unsecured creditors of transferor companies Nos. 1 and 3 to 10, based on written consents provided by these parties. The Tribunal accepted this request, noting that all shareholders and the requisite majority of unsecured creditors had given their consents by way of affidavits.

3. Approval of the Proposed Scheme of Arrangement:

The proposed scheme involves the demerger of the investment business of the transferor companies into the transferee company, aiming for business synergy, consolidation, and pooling of resources. The scheme also includes reorganization of share capital for LSC Autowheels P. Ltd. and LSC Infratech Ltd. The Tribunal noted that the scheme would enhance shareholder value and have a beneficial impact on all concerned parties.

4. Reorganization of Share Capital:

The reorganization involves canceling certain equity shares and issuing non-cumulative compulsorily redeemable preference shares in their place. The Tribunal noted that this reorganization would not involve the diminution of any liability in respect of unpaid share capital or payment to any shareholder of any paid-up share capital. The reorganization is intended to streamline the holding structure and simplify the corporate structure.

5. Compliance with Statutory Requirements:

The Tribunal directed that notices of the meetings be published in specified newspapers and sent to relevant authorities, including the Central Government, Registrar of Companies, and Income-tax Authorities. The Tribunal also appointed a common Chairman and a scrutinizer for the meetings and set the quorum for the meetings at 25% of the total value, with specific provisions for valid proxies and authorized representatives. The Tribunal required the chairperson to file an affidavit confirming compliance with the directions and to report the results of the meetings.

Conclusion:

The Tribunal approved the directions for convening meetings, dispensed with certain meetings based on consents, and outlined the process for the proposed scheme of arrangement and reorganization of share capital, ensuring compliance with statutory requirements.

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