2021 (8) TMI 755 - Tri - Companies Law

Sanction of Scheme of Amalgamation - Sections 230-232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - The meetings of the equity shareholders, unsecured creditors of all the Applicant Companies are dispensed with as their consent by way of affidavits have been received. The Applicant Companies do not have any secured creditors and hence, there is nothing to call and convene their meeting. However, Rule 8 of the Rules requires the notice of the meetings to be sent to the statutory authorities in Form CAA 3. Since the calling and convening of the meetings are being dispensed with, the applicants shall have to make a specific prayer while moving the second motion petition to issue the notice to the statutory authorities. The First Motion Application stands allowed.

Issues Involved:

1. Approval of the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013.
2. Dispensation of meetings of shareholders and creditors.
3. Compliance with statutory requirements and submission of necessary documents.
4. Consideration to be issued to shareholders of Transferor Companies.
5. Continuation of employment for staff, workmen, and employees.
6. Continuation of legal proceedings post-amalgamation.
7. Compliance with accounting treatment under Section 133 of the Companies Act, 2013.

Detailed Analysis:

1. Approval of the Scheme of Amalgamation:

The joint First Motion application was filed by multiple Applicant Companies under Sections 230-232 and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, for sanctioning the proposed Scheme of Amalgamation. The Board of Directors of the applicant-companies approved the Scheme in their respective meetings held on 19.04.2019, and the application is supported by affidavits from the Authorised Representatives.

2. Dispensation of Meetings of Shareholders and Creditors:

The application included a prayer to dispense with the meetings of the shareholders, secured, and unsecured creditors of the Transferor Companies and Transferee Company. The list of shareholders and unsecured creditors as of 28.02.2019, along with their affidavits giving consent to the Scheme and for the dispensation of their meetings, were attached. It was stated that there are no secured creditors in any of the Applicant Companies.

3. Compliance with Statutory Requirements and Submission of Necessary Documents:

The application was accompanied by various supporting documents, including the Memorandum and Articles of Association, Certificates of Incorporation and Registration, and audited financial statements as on 31.03.2020 and provisional financial statements as on 30.09.2020. Affidavits stating that there are no sectoral regulators likely to be affected by the scheme were also filed.

4. Consideration to be Issued to Shareholders of Transferor Companies:

The Transferee Company shall issue consideration to the shareholders of the Transferor Companies as follows:
- No equity shares would be issued for wholly owned subsidiaries.
- Specific equity shares of the Transferee Company will be issued in exchange for the outstanding equity shares of certain Transferor Companies.

5. Continuation of Employment for Staff, Workmen, and Employees:

Clause 11 of the Scheme ensures that all staff, workmen, and employees of the Transferor Companies will become employees of the Transferee Company without any break or interruption in service and on terms and conditions not less favorable than those on which they were employed by the Transferor Companies.

6. Continuation of Legal Proceedings Post-Amalgamation:

Clause 12.1 of the Scheme states that any legal proceedings by or against the Transferor Companies will not abate or be discontinued due to the transfer of business. The proceedings may be continued by or against the Transferee Company as if the Scheme had not been made.

7. Compliance with Accounting Treatment Under Section 133 of the Companies Act, 2013:

The statutory auditor's certificate states that the accounting treatment under the Scheme is in conformity with the provisions prescribed under Section 133 of the Companies Act, 2013.

Conclusion:

The Tribunal allowed the First Motion Application, dispensing with the meetings of the equity shareholders and unsecured creditors of all the Applicant Companies as their consent by way of affidavits had been received. The Applicant Companies do not have any secured creditors, hence no meeting was required. The Tribunal directed the Applicant Companies to file the Second Motion Petition with a specific prayer for sending notices to statutory authorities, including the Central Government, Registrar of Companies, Income Tax Authorities, Competition Commission of India, and Official Liquidator, by disclosing the PAN numbers of all the Applicant Companies.

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