2020 (9) TMI 524 - Tri - Companies Law

Amalgamation of Scheme of Merger by Absorption - Sections 230 to 232 of Companies Act - HELD THAT - The observations made by the Regional Director have been explained by the Petitioner Companies in Para 11 to 16 above. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, as may be required under the Companies Act, 2013 and the Rules made thereunder. The clarifications and undertakings given by the Petitioner Companies are accepted by the Tribunal - The Official Liquidator has filed his report dated 17th August, 2020 in the consolidated Company Scheme Petition bearing CP (CAA) NO. 966/MB.V/2020, inter alia, stating therein that the affairs of the Transferor Company has been conducted in a proper manner not prejudicial to the interest of the Shareholders of the Transferor Company and that the Transferor Company may be ordered to be dissolved without the process of winding up by this Tribunal. From the material on record, the Scheme appears to be fair and reasonable and is not violative of law and is not contrary to public policy. The Scheme is hereby sanctioned and the Appointed Date is fixed as 1st April, 2019. The Transferor Company be dissolved without winding up - The Petitioner Companies to file a copy of this Order, duly certified by the Deputy Director or Assistant Registrar of this Bench, along with Scheme with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable within 60 days from date of receipt of copy of the Order.

Summary

Issues:
1. Sanction of the Tribunal sought under Sections 230 to 232 of the Companies Act, 2013 for the Scheme of Merger by Absorption.
2. Compliance with the observations of the Regional Director (Western Region) regarding the proposed Scheme.
3. Observations and report of the Official Liquidator regarding the affairs of the Transferor Company.
4. Fairness and reasonableness of the Scheme in accordance with the law and public policy.

Analysis:

Issue 1: Sanction of the Tribunal under Sections 230 to 232 of the Companies Act, 2013
The Petitioner Companies sought approval for the Scheme of Merger by Absorption of OCS Technical Solutions India Private Limited by FASSCO International (India) Private Limited. The Petitioner Companies passed Board Resolutions approving the Scheme, highlighting the benefits of revenue generation, cost optimization, operational efficiencies, and synergies. The proposed merger aimed at improving organizational capabilities, reducing overheads, and ensuring operational rationalization. The Tribunal found the Scheme commercially viable and feasible. The Petitioners complied with all requirements as per the Tribunal's directions and filed necessary compliance reports.

Issue 2: Compliance with Regional Director's Observations
The Regional Director's report highlighted various observations, including compliance with accounting standards, appointed date, fee set-off provisions, approval by members and creditors, and filing of necessary affidavits. The Petitioner Companies undertook to comply with these observations through their counsel, ensuring adherence to accounting standards, appointed date effectiveness, fee set-off, and approval requirements. The Tribunal accepted the clarifications and undertakings provided by the Petitioner Companies, ensuring compliance with statutory requirements.

Issue 3: Observations and Report of the Official Liquidator
The Official Liquidator's report confirmed that the affairs of the Transferor Company were conducted properly and not prejudicial to shareholders' interests. The report recommended the dissolution of the Transferor Company without the process of winding up. Based on the report and material on record, the Tribunal found the Scheme fair, reasonable, non-violative of law, and not contrary to public policy. Consequently, the Tribunal sanctioned the Scheme and fixed the Appointed Date as 1st April, 2019, ordering the dissolution of the Transferor Company without winding up.

Issue 4: Fairness and Reasonableness of the Scheme
The Tribunal, after reviewing all statutory compliances and reports, concluded that the Scheme was fair, reasonable, and in line with legal requirements. All concerned regulatory authorities were directed to act upon receipt of the Order, and interested parties were given liberty to apply for necessary directions. The Petitioner Companies were instructed to file copies of the Order and Scheme with the Registrar of Companies and Superintendent of Stamps within specified timelines. Overall, the Tribunal found the Scheme compliant, fair, and in the best interest of the involved companies and stakeholders.

Conclusion:
The Tribunal sanctioned the Scheme of Merger by Absorption, ensuring compliance with legal provisions, accounting standards, and regulatory requirements. The approval highlighted the commercial viability, operational efficiencies, and benefits of the merger, ultimately leading to the dissolution of the Transferor Company without winding up. The detailed analysis and compliance with statutory obligations ensured a fair and reasonable outcome for all parties involved.