2021 (6) TMI 697 - Tri - Companies Law

Approval of scheme of amalgamation - seeking dispensation of meetings of shareholders of both companies - seeking dispensation of the meetings of unsecured creditors of applicant transferor company - HELD THAT - The value of the debts of the Secured Creditors and Unsecured Creditors, as the case may be shall be in accordance with the records or registers of the Applicant Companies and where the entries in the records or registers are disputed, the Chairman of the meetings shall determine the number of values, as the case may be, for the purposes of the meetings - The Chairman to file an affidavit not less than 7 days before the date fixed for the holding of the meetings and to report to this Tribunal that the directions regarding issuance of notices and advertisement of the meetings have been duly complied with as per Rule 12 of the Companies (CAA) Rules, 2016. In compliance of Sub-section (5) of section 230 and Rule 8 of the Companies (CAA) Rules, 2016, the Applicants Companies shall send a notice of meeting under Subsection (3) of Section 230 read with Rule 6 of the Companies (CAA) rules, 2016 in Form No. CAA.3 along with a copy of the scheme of arrangement and the disclosure mentioned under Rule 6, to (i) The Central Government through the Regional Director, North Western Region, (ii) the Registrar of Companies (Ahmedabad) (iii) the Income-tax authorities, (iv) the Reserve Bank of India (v) the Competition Commission of India and (vi) the Official Liquidator stating that representation, if any, to be made by them shall be made within a period of 30 days from the date of receipt of such notice, failing which it shall be presumed that they have no objection to make on the proposed scheme. The said notice shall be sent forthwith after notice is sent to the creditors of the Companies by registered post or by speed post or by courier or by hand delivery at the office of the authority as required by sub-rule (2) of rule 8 of the Companies (CAA) Rules, 2016. Application disposed off.

Summary

Issues:
1. Application for dispensation of meetings of shareholders and creditors of transferor and transferee companies in a scheme of amalgamation.

Analysis:
The application filed by two companies, referred to as Transferor Company and Transferee Company, sought dispensation of meetings of shareholders and creditors as part of a proposed scheme of amalgamation. The Transferor Company, incorporated in 1991, and the Transferee Company, incorporated in 2010, aimed to transfer the whole undertaking of the Transferor Company to the Transferee Company. The advantages of the proposed amalgamation included cost reduction, centralized management, and enhanced goodwill in the market due to synergic benefits. Both companies had resolutions passed by their Board of Directors approving the scheme.

The application stated no investigations or winding-up proceedings pending against either company under the Companies Act, 2013. The companies claimed compliance with accounting standards for the proposed scheme. Details of shareholders and creditors were provided, with consents obtained from the majority for the amalgamation. The application sought directions for dispensing with various meetings and publication requirements.

Upon considering the submissions and material on record, the Tribunal issued specific orders. It dispensed with the meetings of Equity Shareholders of the companies based on shareholders' affidavits. The meeting of Unsecured Creditors of the Transferor Company was also dispensed, given no objections and consent from a significant creditor. As there were no secured creditors of the Transferor Company, their meeting was also dispensed. However, meetings of Secured and Unsecured Creditors of the Transferee Company were scheduled for approval of the scheme.

The Tribunal mandated the publication of meeting details in newspapers, sent notices to creditors, appointed a Chairman and Scrutinizer for the meetings, and outlined quorum requirements. Proxy voting was prohibited, but voting through Authorized Representative was allowed. The Chairman was tasked with filing necessary affidavits and reporting compliance with meeting procedures. The Tribunal required the companies to notify relevant authorities and stakeholders about the proposed scheme and set deadlines for objections or representations.

In conclusion, the Tribunal disposed of the Company Application in accordance with the orders and directions provided, ensuring transparency, compliance, and stakeholder participation in the amalgamation process.