2020 (11) TMI 681 - Tri - Companies Law

Approval of scheme of amalgamation - Section 230-232 of the Companies Act, 2013 - HELD THAT - In compliance of Sub-Section(5) of Section 230 of the Act and Rule 8 of the Companies (CAA) Rules, 2016, all the applicant companies shall send notices 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, South Eastern Region; (b) the Registrar of Companies, Kerala and (c) the Income Tax Authorities immediately at any rate within a week from the date of receipt of this order. The said notices be sent either by Registered Post or by Speed Post 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 Amalgamation of the aforesaid Companies. The Applicant Companies are directed to present a Petition to this Tribunal in Form No.CAA-5 for sanction of the Scheme of Amalgamation of Narmada Design and Construction Private Limited and Narmada Builders and Traders Private Limited with Rhea Traders Private Limited. Application disposed off.

Issues Involved:
1. Dispensation of meetings for equity shareholders and creditors.
2. Approval of the scheme of amalgamation.
3. Appointment of Chairperson for conducting meetings.
4. Compliance with statutory requirements and scrutiny of books of accounts.
5. Reporting and approval by stakeholders and authorities.

Detailed Analysis:

1. Dispensation of Meetings for Equity Shareholders and Creditors:
The applicants sought to dispense with the convening and conducting of meetings of the equity shareholders and secured & unsecured creditors of the applicant companies. Alternatively, they requested directions for the purpose of convening and conducting these meetings, including the appointment of a Chairperson and scrutinizer, and fixing the date, time, and venue for the meetings. The Tribunal initially found that the dispensation could not be granted at that stage and proceeded to consider the alternative prayers.

2. Approval of the Scheme of Amalgamation:
The applicants proposed the amalgamation of Narmada Design and Construction Private Limited and Narmada Builders and Traders Private Limited with Rhea Traders Private Limited. The reasons for the amalgamation included efficient and economical management, pooling of resources, economies of scale, reduction of overheads, and better utilization of resources. The Scheme was expected to lead to the optimum growth and development of the business, enhance shareholder value, and simplify the management structure. The Board of Directors of the Transferor and Transferee Companies approved the Scheme on 08.10.2019.

3. Appointment of Chairperson for Conducting Meetings:
The Tribunal appointed Mr. P.K. Balakrishnan as Chairperson to conduct the meetings of shareholders and creditors. His duties included determining the classes of creditors or members whose meetings were to be held, fixing the time and place of the meetings, setting the quorum, issuing notices, and reporting the results to the Tribunal. The Chairperson conducted the meetings on 08.04.2020, and the Scheme of Amalgamation was unanimously approved by the equity shareholders and unsecured creditors of all the applicant companies.

4. Compliance with Statutory Requirements and Scrutiny of Books of Accounts:
The Official Liquidator was permitted to engage a Chartered Accountant to scrutinize the books of accounts, statutory registers, and other relevant records of the Transferor Companies. The Chartered Accountant's report highlighted issues such as non-compliance with certain sections of the Companies Act, errors in minutes and statutory registers, and the absence of supplementary financial statements. However, the Chartered Accountant concluded that the affairs of the Transferor Companies were not conducted in a manner prejudicial to the interest of its members or creditors or against public interest.

5. Reporting and Approval by Stakeholders and Authorities:
The Tribunal directed the applicant companies to send notices to the Central Government, Registrar of Companies, and Income Tax Authorities within a week from the date of receipt of the order. These authorities were given 30 days to make any representations regarding the proposed amalgamation. The Tribunal ordered the applicant companies to present a Petition in Form No. CAA-5 for the sanction of the Scheme of Amalgamation.

Conclusion:
The Tribunal, after considering the reports of the Chairperson and the Chartered Accountant, found no impediment to the amalgamation and disposed of the Company Application CA(CAA)/01/KOB/2020 accordingly.

← Previous Next →