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2021 (2) TMI 56 - Tri - Companies LawApproval of scheme of Arrangement involving Demerger - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy or public interest. Since all the requisite statutory compliances have been fulfilled, CP(CAA)/4039/MB.II/2019 has been made absolute - The Scheme of Arrangement is sanctioned hereby, and the Appointed Date of the Scheme of Arrangement is 1st day of April, 2019 as defined in Clause 1.3 of the Scheme.
Issues:
1. Sanction sought under Sections 230 to 232 of the Companies Act, 2013 for a Scheme of Arrangement involving demerger. 2. Rationale for the demerger based on distinct business operations and growth potential. 3. Approval process by the Petitioner Companies and compliance with statutory requirements. 4. Observations and recommendations by the Regional Director (Western Region), Ministry of Corporate Affairs. 5. Undertakings and clarifications provided by the Petitioner Companies in response to the Regional Director's observations. 6. Tribunal's assessment of the Scheme's fairness, compliance, and statutory requirements. 7. Sanctioning of the Scheme of Arrangement and directions for filing with regulatory authorities. Analysis: The judgment by the National Company Law Tribunal, Special Bench, Mumbai involved a petition seeking sanction under Sections 230 to 232 of the Companies Act, 2013 for a Scheme of Arrangement that entailed the demerger of a Demerged Undertaking from one company into another Resulting Company. The rationale for the demerger was based on the distinct nature of business operations, growth potential, and the need for focused management in providing freight services to customers for the North American region. The Petitioner Companies had unanimously approved the Scheme of Arrangement through board resolutions and complied with the statutory requirements, including holding meetings with Equity Shareholders and providing necessary reports. The Regional Director (Western Region) had submitted a report recommending approval of the Scheme, subject to certain conditions related to accounting standards, appointed date, compliance with circulars, and other procedural aspects. In response to the Regional Director's observations, the Petitioner Companies provided detailed undertakings and clarifications regarding accounting entries, the appointed date, compliance with meeting requirements, certificates from auditors, service of notices to authorities, and modifications to the Scheme. The Tribunal accepted these undertakings and clarifications, ensuring compliance with statutory provisions. After reviewing the material on record, the Tribunal found the Scheme to be fair, reasonable, compliant with legal provisions, and not contrary to public policy or interest. Consequently, the Tribunal sanctioned the Scheme of Arrangement, setting the Appointed Date as April 1, 2019, and directed the Petitioner Companies to file necessary documents with the Registrar of Companies and Superintendent of Stamps within specified timelines. The judgment concluded by directing regulatory authorities to act on the sanctioned Scheme, inviting interested parties to apply for necessary directions, and consigning the file to the record, thereby resolving the issues raised and providing a comprehensive legal framework for the demerger process.
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