2020 (11) TMI 682 - Tri - Companies Law

Approval of Scheme of Arrangement for the demerger - Section 230-232 of Companies Act - HELD THAT - Direction for dispensation of various meetings issued - directions for issuance of various meetings issued - application disposed off.

Summary

Issues:
1. Approval of Scheme of Arrangement for demerger
2. Rationale for the demerger
3. Shareholder consent and approval
4. Treatment of creditors in the Scheme
5. Appointment of chartered accountants for scrutiny

Approval of Scheme of Arrangement for demerger:
The judgment outlines that the Scheme of Arrangement for the demerger of the Demerger Undertaking has been approved by the Board of Directors of the Transferor and Transferee Companies. The Appointed Date and Effective Date of the Scheme have been specified, with a focus on the Core Business and Investment Undertaking of the Transferor Company.

Rationale for the demerger:
The rationale for the demerger includes enabling a focused approach on Core Business activities, efficient management of the Investment Undertaking, enhancing strategic flexibility, dedicated management focus, and maximizing shareholder value. It emphasizes the separation of business activities to accelerate growth and expansion opportunities.

Shareholder consent and approval:
All Equity Shareholders of the Applicant Companies have given their consent to the Scheme through Affidavits, eliminating the need for a meeting. The judgment specifies the absence of preference shareholders and highlights the consent received from Secured and Unsecured Creditors, ensuring compliance with the Companies Act, 2013.

Treatment of creditors in the Scheme:
The judgment clarifies that the Scheme does not affect the rights and interests of creditors as there is no compromise or arrangement with them. It details the consent and approval received from Secured and Unsecured Creditors, along with the dispensation of meetings for both categories, ensuring no diminution of liability for creditors.

Appointment of chartered accountants for scrutiny:
In accordance with the Companies Act, 2013 and relevant rules, the Tribunal appoints chartered accountants to assist the Official Liquidator in scrutinizing the books of accounts of the Applicant Company. The judgment specifies the process for obtaining responses from relevant authorities and the requirement for compliance reporting by the Applicant Companies.

This comprehensive analysis of the judgment provides a detailed overview of the issues involved, the decisions made by the Tribunal, and the legal compliance measures undertaken in the context of the Scheme of Arrangement for demerger.