2020 (9) TMI 603 - Tri - Companies Law

Sanction of Scheme of Merger by Absorption - convening and holding of various meetings - section 230 to 232 of Companies Act - HELD THAT - It shall be the duty of the Applicant Company concerned to ensure that every creditor of the company is put on notice as regards the Scheme. Objections, if any, will be considered at the time of final hearing for sanction of the Scheme. The Applicant Companies to serve the notice upon (i) the Central Government through the Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai; (ii) Registrar of Companies, Maharashtra, Mumbai; (iii) the concerned Income Tax Authority within whose jurisdiction each of the Applicant Companies' assessments are made, pursuant to section 230(5) of the Companies Act, 2013 and as per rule 8 of the Companies (Compromises, Arrangements Amalgamations) Rules, 2016. If no response is received by the Tribunal from such authorities within 30 days of the date of receipt of the notice it will be presumed that they have no objection to the proposed Scheme.

Summary

Issues:
1. Scheme of Merger by Absorption of two companies and their shareholders.
2. Dispensing with the meetings of Equity and Preference Shareholders.
3. Notice to Secured and Unsecured Creditors under Companies Act, 2013.
4. Serving notices to regulatory authorities and Official Liquidator.
5. Appointment of Chartered Accountants for scrutiny and compliance reporting.

Analysis:
1. The judgment pertains to a Scheme of Merger by Absorption between two companies, involving the transfer of one company's assets and liabilities to another, along with their respective shareholders. The Board of Directors of both companies have approved the Scheme, and the meetings of Equity and Preference Shareholders have been dispensed with based on their consent affidavits.

2. While there is no compromise or arrangement with the creditors of the companies, the Tribunal directs the companies to issue notices to their Secured and Unsecured Creditors as per the Companies Act, 2013. Creditors are given the opportunity to submit representations, which will be considered during the final hearing for sanction of the Scheme. The companies are obligated to ensure that every creditor is informed about the Scheme.

3. The Applicant Companies are required to serve notices to regulatory authorities such as the Central Government, Registrar of Companies, and Income Tax Authority, as well as the Official Liquidator. Responses from these authorities within 30 days will indicate their no objection to the proposed Scheme. An appointed Chartered Accountant will assist the Official Liquidator in scrutinizing the books of the Transferor Company for the last five years, with the Transferor Company bearing the associated fees.

4. The Transferor Company must serve notice of the Scheme to the Official Liquidator, and the appointed Chartered Accountant will submit representations to the Tribunal. The Official Liquidator's response within 30 days will determine objections to the proposed Scheme. The Applicant Companies are required to file an affidavit of service within ten working days after serving notices to regulatory authorities and ensure compliance reporting to the Tribunal.

This judgment outlines the procedural requirements and steps to be followed for the merger scheme, ensuring transparency, compliance with legal provisions, and protection of the interests of shareholders, creditors, and regulatory authorities involved in the process.