2020 (12) TMI 463 - Tri - Companies Law

Approval of scheme of amalgamation - section 230-232 of Companies Act - HELD THAT - Various directions regarding convening and holding of various meetings issued - various directions regarding issuance of notices for the meeting also issued. The scheme is approved.

Summary

Issues:
Scheme of amalgamation between two companies involving shareholders, secured creditors, and unsecured creditors; approval and consent requirements; jurisdiction of National Company Law Tribunal, Mumbai Bench; regulatory approvals and objections.

Analysis:
1. Scheme of Amalgamation: The judgment pertains to a scheme of amalgamation between two companies, referred to as the First Applicant Company and the Second Applicant Company. The scheme involves the consolidation of assets and liabilities of the First Applicant Company into the Second Applicant Company as a going concern. The First Applicant Company is a wholly owned subsidiary of the Second Applicant Company, both having their registered offices in Mumbai, Maharashtra.

2. Shareholders' Approval: The judgment details that the Equity Shareholders of the First Applicant Company have provided their consent and approval to the scheme through affidavits, thereby eliminating the need for a formal shareholders' meeting. As no shares are to be issued under the scheme, the rights of the Shareholders of the Second Applicant Company are not adversely affected.

3. Secured Creditors' Consent: The Second Applicant Company has 26 secured creditors, and the judgment outlines the process for obtaining consent from these creditors. The Second Applicant Company must obtain consent affidavits from its secured creditors, ensuring that their rights are not adversely impacted post-merger due to the positive net worth of the First Applicant Company.

4. Unsecured Creditors' Approval: The judgment discusses the presence of unsecured creditors for both companies. The First Applicant Company has only one unsecured creditor who has provided consent through an affidavit. The Second Applicant Company, with 5203 unsecured creditors, must notify those with a value above a specified threshold and invite representations within 30 days.

5. Regulatory Approvals: Various regulatory approvals are required for the scheme. The First Applicant Company has obtained a No-Objection Certificate from the Reserve Bank of India. Both companies are directed to serve notices on government authorities, tax authorities, stock exchanges, and sectoral regulators, ensuring compliance with the Companies Act, 2013.

6. Official Liquidator's Scrutiny: The judgment appoints a Chartered Accountant to assist the Official Liquidator in scrutinizing the books of the First Applicant Company for the last 5 years. The Official Liquidator must submit a report to the Tribunal within 30 days, indicating any objections to the proposed scheme.

7. Publication and Compliance: The Applicant Companies are directed to file an affidavit proving publication in newspapers, sending notices, and complying with all conditions before the date fixed for the hearing of the Company Petition.

In conclusion, the judgment addresses various aspects of the scheme of amalgamation, ensuring compliance with legal requirements, obtaining necessary approvals, and safeguarding the interests of shareholders, secured creditors, and unsecured creditors involved in the merger process.