2022 (4) TMI 785 - Tri - Companies Law

Sanction of Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - The objections/observations to the Scheme received from RD, ROC, OL and IT have been adequately replied by the petitioner company and hence there is no impediment in approval of the Scheme. The Scheme (Annexure-F) is approved and the same is declared to be binding on all the shareholders and creditors of the Petitioner Company and on all concerned. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or in respect of any permission/compliances with any other requirement which may be specifically required under any law - the scheme is approved - application allowed.

Issues Involved:
1. Sanction of Scheme of Amalgamation.
2. Compliance with statutory requirements.
3. Objections from statutory authorities.
4. Accounting treatment and financial compliance.
5. Approval and binding nature of the Scheme.

Detailed Analysis:

1. Sanction of Scheme of Amalgamation:
The petition was filed under Sections 230-232 of the Companies Act, 2013, seeking the sanction of a Scheme of Amalgamation between E2 Open Software India Private Limited (Transferee Company), Steelwedge Technologies Private Limited (Transferor Company No. 1), Entomo Technologies India Private Limited (Transferor Company No. 2), and Amber Road Software Private Limited (Transferor Company No. 3/Petitioner). The Scheme was intended to be effective from the appointed date of 01st April 2019. The Tribunal found the petition maintainable under Rule 3(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

2. Compliance with statutory requirements:
The Petitioner Company had previously filed a First Motion Application seeking dispensation of meetings of Equity Shareholders and Creditors, which was granted as there were no Secured and Unsecured Creditors. Notices were issued to statutory authorities including the Registrar of Companies, Regional Director, Official Liquidator, Principal Commissioner of Income Tax, Competition Commission of India, and Reserve Bank of India. The Petitioner Company complied with the requirement to publish notices in specified newspapers.

3. Objections from statutory authorities:
The Regional Director (RD) raised several observations:
- The Transferee Company is fully owned by foreign entities and must comply with FEMA and RBI regulations.
- The appointed date was considered very old and suggested to be amended.
- Supplementary accounting statements were not provided as required.
- Clarification was needed on the accounting treatment of inter-corporate loans and outstanding amounts.
- The Transferee Company must absorb all statutory dues and comply with related party transaction regulations.
- The Scheme's provision for clubbing of authorized capital without stamp duty was not in line with Section 232(3)(i) of the Companies Act, 2013.

4. Accounting treatment and financial compliance:
The Petitioner Company responded to the RD’s report:
- Confirmed compliance with FEMA/RBI regulations.
- Justified the appointed date due to COVID-19 and lockdowns.
- Submitted supplementary accounting statements.
- Clarified the accounting treatment for inter-company loans and outstanding amounts, stating they would be transferred or canceled as per the Scheme.
- Confirmed absorption of statutory dues and compliance with related party transaction regulations.
- Agreed to pay the differential fee for clubbing authorized capital.

5. Approval and binding nature of the Scheme:
The Tribunal concluded that the objections from RD, ROC, OL, and IT were adequately addressed by the Petitioner Company. The Scheme was approved and declared binding on all shareholders and creditors. The order clarified that it does not grant exemption from stamp duty, taxes, or other charges. The Petitioner Company was directed to deliver a certified copy of the order to the Registrar of Companies within 30 days, resulting in the dissolution of Transferor Company No. 3 without winding up. The Petitioner Company was also required to deposit specified amounts with the Ministry of Corporate Affairs and the Prime Minister's National Relief Fund.

The Tribunal issued formal orders under Form No. CAA-7 upon filing the Schedule of Property by the Transferor Company. The petition was disposed of accordingly, and a copy of the order was communicated to the Counsel for the Petitioner Company.

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