2022 (1) TMI 619 - Tri - Companies Law

Sanction of scheme of arrangement and amalgamation - section 230-232 of Companies Act - HELD THAT - In view of the fact that all the unsecured creditors of all the applicant- companies have given their consent affidavits, the meetings of the unsecured creditors of all the applicant-companies are hereby dispensed with. Various directions with regard to holding and convening of various meetings issued - directions with regard to issuance of various notices issued. The scheme is approved - application allowed.

Issues Involved:
1. Scheme of arrangement and amalgamation.
2. Business activities of applicant-companies.
3. Approval and rationale of the scheme.
4. Share exchange ratio.
5. Consent of shareholders and creditors.
6. Notices to regulatory authorities.
7. Compliance report.

Issue-wise Detailed Analysis:

1. Scheme of Arrangement and Amalgamation:
The judgment addresses a scheme of arrangement and amalgamation among nine applicant-companies. The companies involved are Bradma Logistics Parks P. Ltd., Wellknown Chemicals P. Ltd., Wellknown Enterprises P. Ltd., Wellknown Hitech Projects P. Ltd., Wellknown Landmark Ventures P. Ltd., Wellknown Logistics P. Ltd., Wellknown Synthetics P. Ltd., Wellknown Technologies P. Ltd., and Wellknown Textile Industries P. Ltd.

2. Business Activities of Applicant-Companies:
Each company has distinct business activities:
- Applicant-company No. 1 is involved in logistics and transportation.
- Applicant-company No. 2 engages in partnerships and financial guarantees.
- Applicant-company No. 3 deals with farming and food processing.
- Applicant-company No. 4 focuses on construction and real estate development.
- Applicant-company No. 5 operates in infrastructure development.
- Applicant-company No. 6 is similar to No. 1 in logistics and transportation.
- Applicant-company No. 7 is in the textile industry.
- Applicant-company No. 8 provides educational technology services.
- Applicant-company No. 9, the transferee company, is in textile manufacturing.

3. Approval and Rationale of the Scheme:
The board of directors of the applicant-companies approved the scheme on August 14, 2021, with an appointed date of April 1, 2021. The rationale includes combining businesses for better performance, simplifying the group structure, eliminating multiplicity of companies, achieving efficiencies and economies of scale, reducing operational costs, and enabling unified regulatory compliance.

4. Share Exchange Ratio:
The scheme outlines specific share exchange ratios for the amalgamation:
- No shares for shareholders of applicant-company No. 1.
- 94 equity shares of applicant-company No. 9 for 1 equity share of applicant-company No. 2.
- 317 equity shares of applicant-company No. 9 for 1 equity share of applicant-company No. 3.
- 7 equity shares of applicant-company No. 9 for 4 equity shares of applicant-company No. 4.
- 15 equity shares of applicant-company No. 9 for 13 equity shares of applicant-company No. 5.
- 4 equity shares of applicant-company No. 9 for 3 equity shares of applicant-company No. 6.
- 55 equity shares of applicant-company No. 9 for 17 equity shares of applicant-company No. 7.
- 43 equity shares of applicant-company No. 9 for 9 equity shares of applicant-company No. 8.

5. Consent of Shareholders and Creditors:
All equity shareholders of the applicant-companies provided consent affidavits, leading to the dispensation of shareholder meetings. Similarly, all unsecured creditors of the applicant-companies consented to the scheme and waived the requirement for creditor meetings.

6. Notices to Regulatory Authorities:
The applicant-companies were directed to serve notices of the application to the Central Government, Registrar of Companies, Income-tax Authority, Goods and Services Tax authorities, and other sectoral regulators. If no response is received within 30 days, it will be presumed there are no objections to the scheme.

7. Compliance Report:
The applicant-companies must file a compliance report with the registry regarding the directions in the order, replacing the customary affidavit of service due to the COVID-19 pandemic.

Conclusion:
The Tribunal ordered the approval of the scheme of arrangement and amalgamation, with specific directions for notices and compliance reports. The order was made considering the consent from all shareholders and creditors, and the rationale for the scheme was found satisfactory for better performance and regulatory compliance.

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