2020 (2) TMI 1721 - Tri - Companies Law

Seeking sanction to the Scheme of Arrangement between Huntsman International (India) Private Limited and Huntsman Advanced Materials Solutions Private Limited and their respective shareholders - Sections 230 - 232 of the Companies Act, 2013 - HELD THAT - From the material on record and after perusing the clarifications and submissions of the Petitioner Companies to the Report filed by the Regional Director, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition filed by the Petitioner Companies is made absolute in terms of prayer clauses (a), (c) and (d) of the Company Scheme Petition. Petition disposed off.

Summary

Issues:
1. Scheme of Arrangement between two companies under Sections 230-232 of the Companies Act, 2013.
2. Demerger of Demerged Undertaking into a wholly-owned subsidiary.
3. Compliance with accounting standards, FEMA guidelines, and other legal requirements.
4. Observations and recommendations by the Regional Director.
5. Responses and compliance by the Petitioner Companies.
6. Approval and final order by the National Company Law Tribunal, Mumbai.

Scheme of Arrangement:
The judgment concerns a Company Scheme Petition filed seeking sanction to a Scheme of Arrangement between two companies under Sections 230-232 of the Companies Act, 2013. The proposed Scheme involves the demerger of the Demerged Undertaking of one company into another on a going concern basis.

Demerger and Rationale:
The Scheme aims to segregate distinct business verticals for better control and management, promoting growth and efficiency. The demerger is intended to provide greater business focus, independent strategies, and improved access to financial resources for each company. The Board of Directors of the companies have approved the Scheme, believing in the distinct risk and reward associated with each business vertical.

Compliance Requirements:
The judgment addresses compliance with accounting standards, FEMA guidelines for foreign shareholders, and other legal requirements. The Regional Director's observations, including compliance with AS-14, AS-5, and FEMA guidelines, were responded to by the Petitioner Companies, ensuring adherence to necessary accounting entries and statutory obligations.

Observations and Recommendations:
The Regional Director's report highlighted key observations related to accounting treatment, appointed date, compliance with FEMA guidelines, and submission of certificates from auditors. The Petitioner Companies provided detailed responses to each observation, clarifying compliance with the Companies Act, 2013, and submitting necessary documents and certificates.

Approval and Order:
After reviewing the submissions and clarifications, the National Company Law Tribunal, Mumbai, found the Scheme fair, reasonable, and compliant with legal provisions. The Company Scheme Petition was made absolute, with directions for filing certified copies of the order and Scheme with relevant authorities within specified timelines.

Conclusion:
The judgment concludes with directions for compliance, stamp duty adjudication, and electronic filing with regulatory authorities. Interested parties were granted liberty to apply for any necessary directions or modifications. Overall, the judgment reflects a comprehensive analysis of the Scheme of Arrangement and ensures compliance with legal requirements for the demerger and subsequent operations of the companies involved.