2021 (1) TMI 988 - Tri - Companies Law

Approval of scheme of amalgamation - seeking for dispensation with the meeting of equity shareholders and unsecured creditor - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - The meeting of the Equity Shareholders and Unsecured Creditors of the Transferor Company be dispensed with - the Applicant Companies shall serve the notice of Application along with a copy of the Scheme upon (i) Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai; (ii) Registrar of Companies, Maharashtra, Mumbai; (iii) Income Tax Authority within whose jurisdiction the Applicant Companies' assessments are made in terms to section 230(5) of the Act and as per Rule 8 Rules. If no response is received by the Tribunal from the regulatory authorities within 30 days of the date of receipt of the notice it will be presumed that the Authorities have no objection to the Scheme - the First Applicant Company is also directed to serve notice of Application along with a copy of the Scheme upon the Official Liquidator pursuant to Section 230(5) of the Act. Application allowed.

Issues involved:
1. Approval of Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.
2. Dispensation with the meeting of equity shareholders and unsecured creditors.
3. Consent of equity shareholders and preference shareholder for the Scheme of Amalgamation.
4. Dispensation with the meeting of unsecured creditors.
5. Beneficial aspects and rationale behind the proposed Scheme.
6. Impact on shareholders, creditors, and stakeholders.
7. Compliance with legal procedures and regulatory authorities.

Detailed Analysis:

1. The judgment pertains to the approval of a Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013, involving two companies, namely the Transferor Company and the Transferee Company. The Scheme aims to merge L&T - Gulf Private Limited (Transferor Company) with L&T Hydrocarbon Engineering Limited (Transferee Company) along with their respective shareholders. The Board of Directors of both companies have unanimously approved the Scheme, and the Appointed Date for the scheme is set as 1st April 2020.

2. The Applicant Companies sought dispensation with the meeting of equity shareholders and unsecured creditors, as all necessary consents were obtained. The Scheme involved no secured creditors, and the Equity Shareholders of the Transferor Company had consented to the amalgamation. The meeting of unsecured creditors was also proposed to be dispensed with, with individual notices to be issued to them for representations.

3. The judgment highlighted the benefits and rationale behind the proposed Scheme, emphasizing cost optimization, organizational capability improvement, consolidation of business lines, and operational efficiencies. It was argued that the Scheme was commercially viable, fair, and would lead to administrative rationalization, operational synergies, and enhanced business functions. The Scheme was deemed to be in the interest of shareholders, creditors, lenders, and stakeholders of both companies.

4. The impact on shareholders and creditors was addressed, clarifying that no new shares would be issued post-merger, ensuring no change in the Equity Share Capital. Creditors' rights were safeguarded, with assets post-amalgamation deemed sufficient to discharge claims. The net worth of the Transferee Company remained positive, and the shareholding pattern remained unchanged.

5. The judgment concluded by allowing the Company Application, dispensing with the meetings of equity shareholders and unsecured creditors, and issuing notices to regulatory authorities for objections, if any. Compliance reports were to be filed, and the Official Liquidator was directed to submit a report within a specified timeframe. The judgment ensured adherence to legal procedures and compliance with regulatory requirements in the context of the proposed Scheme of Amalgamation.

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