2021 (9) TMI 1202 - Tri - Companies Law

Seeking amendment in the scheme of amalgamation - Rules 11 and 32 of National Company Law Tribunal Rules, 2016 - HELD THAT - A scheme of arrangement approved between or among companies is required to comply with the provisions of Sections 230-232 of the Act. On a perusal of the Ministry of Corporate Affairs (MCA) Circular dated 21st August 2019, it is clear that the companies may choose the appointed date of the merger/amalgamation based on occurrence of an event, which is relevant to the merger between the companies. This would allow the companies concerned to function independently till such event is actually materialised. The circular further clarifies that the term appointed date used in Section 232(6) shall be deemed to be the acquisition date for the purpose of conforming to Indian Accounting Standards 103 dealing with business combinations. Since the applicant want to amend the CA (CAA) based on the clarificatory circular of Ministry of Corporate Affairs and also amend the reliefs sought therein, the reliefs sought for by the applicant may be granted - Application allowed.

Summary

Issues:
1. Amendment of Scheme of Amalgamation and reliefs sought in the application.

Analysis:
The National Company Law Tribunal, Kochi Bench, considered two Company Applications filed by different companies seeking to amend their Scheme of Amalgamation and the reliefs sought in the application. The appointed date for both companies was set as 1st April, 2019, which was significantly antedated due to delays caused by the pandemic situation. The applicants justified the appointed date based on commitments to stakeholders and the need to consolidate business operations. The Financial Creditors and Equity Shareholders had consented to the proposed schemes. The proposed Scheme did not involve restructuring or varying debt obligations, and no investigation proceedings were pending against the companies under the Companies Act, 2013.

In reference to a circular by the Ministry of Corporate Affairs, the Tribunal noted that companies could choose an "appointed date" based on relevant events, allowing them to operate independently until such events materialize. The circular clarified that the appointed date would be deemed as the acquisition date for accounting standards compliance. Considering the applicants' request to amend the applications based on the circular and the reliefs sought therein, the Tribunal granted the reliefs. The applicants were directed to file amended applications within 15 days from the date of the order, issued on 20th September 2021.

This judgment highlights the importance of justifying appointed dates in schemes of amalgamation, compliance with relevant circulars, and the need for stakeholders' consent in such corporate restructuring processes. The Tribunal's decision to allow the amendments based on the clarificatory circular demonstrates a practical approach to addressing delays and ensuring compliance with legal requirements in corporate matters.