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2021 (12) TMI 1022 - AT - Companies LawSeeking approval of scheme of amalgamation - seeking exemptions from and/or seeking directions for convening/holding of the meetings of Shareholders and/or Creditors of the Appellant 1/Company and Appellant 2/Company - Section 230-232 of the Companies Act, 2013 - HELD THAT - Having regard to the fact that the Scheme of Amalgamation is already approved with most of the stakeholders assenting, with Equity Shareholders representing 100% in number and 100% in value of Appellant 1/Company who had given their consent on affidavit; the Secured Creditors of Appellant 1/Company representing 100% in number and 100% in value have given their consent and no objection to the Scheme in Affidavit, the Appellant Companies had sought for direction to dispense with the meeting before the NCLT. The direction in the Impugned Order with respect to fixing of the Quorum by 10 % of Shareholders i.e. 440 and minimum of 50 Unsecured Creditors is hereby set aside. The meetings may be conducted within 8 weeks from the date of this Order. Appeal allowed.
Issues:
1. Interpretation of provisions under Section 230-232 of the Companies Act, 2013 regarding the Quorum for meetings of Shareholders and Creditors. 2. Determination of the Quorum for meetings in the context of Scheme of Amalgamation. 3. Compliance with the Companies Act, 2013 and relevant regulations for approval of the Scheme of Amalgamation. Issue 1: Interpretation of provisions under Section 230-232 of the Companies Act, 2013 regarding the Quorum for meetings of Shareholders and Creditors. The Appellants challenged the Order of the NCLT under Section 421 of the Companies Act, 2013, seeking exemptions and directions for convening meetings to approve the Scheme of Amalgamation. The NCLT directed a specific number of Shareholders and Creditors to be present for the meetings, which the Appellants argued was beyond the provisions of the Act. They contended that Section 230(6) of the Act does not specify the number of Shareholders or Creditors required to constitute a Quorum for such meetings. The Appellants emphasized that the consent for the Scheme and participation in the meeting are distinct, and the presence of a determinate number of participants should not determine the lack of consent. They argued that the approval of the Scheme should satisfy the conditions of the Act, regardless of the number of attendees. Issue 2: Determination of the Quorum for meetings in the context of Scheme of Amalgamation. The NCLT, in its Impugned Order, specified the number of Shareholders and Unsecured Creditors required to constitute the Quorum for the meetings. However, the Appellants contended that this 10% Quorum determination was not provided for under Section 230-232 of the Act or the relevant Rules. They argued that the number of participants at the Virtual Meeting should not be determinative of consent for the Scheme. The Appellants highlighted that three-fourths majority for amalgamation would be achieved through e-voting, as the Transferee Company is listed and mandated to provide e-voting facility to its shareholders. They emphasized that the Scheme had already received approval from most stakeholders, and the direction to fix the Quorum by a specific number was unnecessary. Issue 3: Compliance with the Companies Act, 2013 and relevant regulations for approval of the Scheme of Amalgamation. The Appellants sought direction from the NCLT to dispense with the meetings, as most stakeholders had already assented to the Scheme. The NCLT's direction regarding the Quorum was set aside, and the Appellants were allowed to conduct the meetings within a specified timeframe. The Appellate Tribunal acknowledged the approvals received from Equity Shareholders and Secured Creditors, setting aside the NCLT's Quorum requirement. The decision emphasized the importance of compliance with the Act and regulations, particularly regarding the approval process for amalgamation schemes. This detailed analysis of the judgment highlights the key issues surrounding the interpretation of legal provisions, determination of Quorum, and compliance with regulatory requirements in the context of approving a Scheme of Amalgamation under the Companies Act, 2013.
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