2021 (12) TMI 1059 - Tri - Companies Law

Sanction of scheme of arrangement - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT - Various directions with regard to holding, convening and dispensing of various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

Issues Involved:
1. Scheme of arrangement between two companies.
2. Approval and benefits of the demerger.
3. Convening meetings of shareholders and creditors.
4. Notices and advertisements for meetings.
5. Quorum and voting procedures.
6. Reporting results to the Tribunal.
7. Compliance with statutory requirements.

Detailed Analysis:

1. Scheme of Arrangement:
The scheme of arrangement ("scheme") involves the demerger of the business undertaking from Raymond Apparel Ltd. ("first applicant-company" or "demerged company") into Raymond Ltd. ("second applicant-company" or "resulting company") as per sections 230 to 232 of the Companies Act, 2013. The first applicant-company is a wholly-owned subsidiary of the second applicant-company.

2. Approval and Benefits of the Demerger:
The board of directors of both companies approved the scheme on September 27, 2021. The rationale for the demerger includes achieving synergies post-COVID-19 by consolidating the apparel business into the resulting company, leading to benefits such as stronger revenue, improved competitiveness, reduced business risks, synergy benefits in design and innovation, reduced overheads, operational rationalization, enhanced shareholder value, focused strategy, and increased investor confidence.

3. Convening Meetings of Shareholders and Creditors:
Meetings of equity shareholders of both companies and secured creditors of the first applicant-company are to be convened. The meetings are scheduled for December 27, 2021, and December 30, 2021, respectively. Notices of the meetings, including proxy forms and explanatory statements, must be sent to shareholders and creditors at least 30 days in advance.

4. Notices and Advertisements for Meetings:
Notices of the meetings must be advertised in the Financial Express (Mumbai edition) and its Marathi translation in Navshakti (Mumbai edition) at least 30 days before the meeting dates. Due to the COVID-19 pandemic, the companies have the option to publish notices online in the respective e-newspaper editions.

5. Quorum and Voting Procedures:
The quorum for the meetings is as prescribed under section 103 of the Companies Act, 2013. If the required quorum is not present, the meeting will be adjourned by 30 minutes, and the persons present will constitute the quorum. Valid proxies and authorized representatives are permitted to vote, provided the prescribed forms are filed at least 48 hours before the meetings.

6. Reporting Results to the Tribunal:
The chairpersons of the meetings must report the results to the Tribunal within 30 days of the conclusion of the meetings. The reports must be verified by affidavits as per rule 14 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

7. Compliance with Statutory Requirements:
The applicant-companies must serve notices of the meetings to the Central Government, concerned Income-tax Authority, and Registrar of Companies, Pune. These authorities may submit their representations within 30 days. The companies must also issue individual notices to unsecured creditors and host the notices on their websites. Proof of compliance with the directions regarding notices and advertisements must be filed electronically with the Tribunal.

Conclusion:
The Tribunal ordered the convening of meetings for the approval of the scheme, adherence to statutory requirements for notices and advertisements, and reporting of the meeting results. The scheme aims to achieve operational synergies and enhanced value for shareholders while ensuring compliance with the Companies Act, 2013.

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