2020 (9) TMI 516 - Tri - Companies Law

Sanction of Amalgamation Scheme - section 230(1)(b) of the Companies Act, 2013 - HELD THAT - This Bench is of the view that the meeting of the equity shareholders and creditors of the Transferee Company can be dispensed with since all the Transferor Companies are wholly-owned subsidiary of the Transferee Company. The Counsel for the Applicant Companies further clarifies that the Transferee Company will file petition and comply with the provisions of service of notices upon all Regulatory Authorities. The Applicant Companies to serve notice of the present Application along with its enclosures upon - (i) concerned Income Tax Authority within whose jurisdiction the Applicant Companies assessments are made clearly indicating the PAN of the concerned company (PAN of First Applicant Company AAACM3648P, PAN of Second Applicant Company AAACP9345A, PAN of Third Applicant Company AAACR5880Q, PAN of Fourth Applicant Company AADCS9305C and PAN of Fifth Applicant Company AAACT8968M) (ii) the Central Government through the office of Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai (iii) Registrar of Companies, Maharashtra, Mumbai, and any other applicable regulatory authority pursuant to section 230(5) of the Companies Act, 2013 and rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, with a direction that they may submit their representations, if any, within a period of thirty days from the date of receipt of such notice to the Tribunal with copy of such representations shall simultaneously be served upon the Applicant Companies, failing which, it shall be presumed that the authorities have no representations to make on the proposed Scheme. The Transferor Companies are also directed to serve notice along with a copy of the Scheme upon the Official Liquidator, High Court, Bombay, pursuant to section 230(5) of the Companies Act, 2013 and as per rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

Summary

Issues:
1. Scheme of Amalgamation of multiple companies.
2. Approval of Scheme by Board of Directors.
3. Consent of equity shareholders.
4. No secured creditors in Transferor Companies.
5. Compliance with Companies Act, 2013.
6. No reconstruction or arrangement with shareholders or creditors.
7. Service of notices to Regulatory Authorities and concerned parties.

Analysis:

1. The judgment deals with a Scheme of Amalgamation involving several companies, including Transferor and Transferee Companies. The Scheme aims at merging multiple companies for various benefits such as consolidation, cost reduction, and operational efficiencies.

2. The Board of Directors of each Applicant Company approved the Scheme on June 24, 2020, indicating internal approval and compliance with corporate governance requirements.

3. Consent affidavits from equity shareholders of the Transferor Companies were submitted, dispensing with the need for a shareholders' meeting, ensuring compliance with shareholder rights and transparency.

4. As there are no secured creditors in the Transferor Companies, the requirement to send notices to creditors does not arise, simplifying the process and avoiding unnecessary steps.

5. The Applicant Companies ensured compliance with the Companies Act, 2013, by following the provisions related to schemes, arrangements, and amalgamations, demonstrating adherence to legal requirements.

6. The judgment clarifies that no reconstruction or arrangement with shareholders or creditors of the Transferee Company is necessary, citing precedents and establishing that no meetings are required due to the nature of the merger involving wholly-owned subsidiaries.

7. Detailed instructions were provided for serving notices to Regulatory Authorities, Income Tax Authority, Central Government, and other relevant bodies, emphasizing transparency and regulatory compliance. Additionally, directions were given for compliance reports and scrutiny by appointed professionals, ensuring thorough review and adherence to legal procedures.