2020 (10) TMI 699 - Tri - Companies Law

Approval of Scheme of Amalgamation (Merger by Absorption) - Section 230-232 of Companies Act - HELD THAT - Directions regarding holding and dispensation of various meetings issued - directions regarding issunce of various notices also issued - application allowed - scheme is approved.

Summary

Issues: Scheme of Amalgamation (Merger by Absorption) of two companies with their respective shareholders.

Analysis:
1. The Scheme of Amalgamation presented before the National Company Law Tribunal involves the merger of Cheese Land Agro (India) Private Limited with Prabhat Dairy Limited, along with their respective shareholders. The appointed date for the Scheme is set as 1st October 2018.

2. The rationale behind the amalgamation includes various benefits such as synergies in cattle feed business, operational efficiencies, cash flow management, resource optimization, reduction in overheads, and regulatory compliance simplification. The merger aims to streamline operations, maximize stakeholder value, and enhance competitiveness in the market.

3. The First Applicant Company, a wholly owned subsidiary of the Transferee Company, is primarily engaged in cattle feed business and dairy product manufacturing. Both Equity Shareholders of the First Applicant Company, including the Transferee Company and its nominee shareholders, have consented to the proposed Scheme.

4. As there are no Secured Creditors in the First Applicant Company, the need to send notices to them is eliminated. The Scheme is structured under section 230(1)(b) of the Companies Act, 2013, without affecting the rights of creditors, ensuring payment to Unsecured Creditors in the ordinary course of business.

5. The Scheme does not involve the issuance of shares as consideration, ensuring no impact on the equity share capital or shareholding of the Transferee Company. The rights of creditors of the Transferee Company remain unaffected, with assets post-amalgamation sufficient to meet their claims.

6. Following precedents set by the Tribunal in various cases, it is determined that no meetings of shareholders or creditors of the Transferee Company are necessary for approval of the Scheme. The meeting of Equity Shareholders and Creditors of the Second Applicant is also deemed unnecessary due to the subsidiary relationship with the Transferor Company.

7. Directions are issued for serving notices to Income Tax authorities, regulatory bodies, and other relevant entities, ensuring their representations within a specified timeframe. The Official Liquidator is appointed to scrutinize the Transferor Company's accounts, with compliance proofs required to be filed within 15 days of completing the necessary actions.