1972 (4) TMI 77 - HC - Companies Law

Summary

Issues:
Petition under sections 391 and 394 of the Companies Act for sanctioning a scheme of arrangement and amalgamation between two sister-companies, involving the question of whether the transferee-company should also hold a statutory meeting of its shareholders to approve the scheme.

Analysis:

The petition seeks approval for the scheme of arrangement and amalgamation between the transferor-company and the transferee-company, both having similar objects and under the same management. The scheme aims to merge the two companies to enhance efficiency and profitability in their complementary businesses. The board of directors of both companies approved the scheme, which involves the transfer of assets and liabilities of the transferor-company to the transferee-company.

The Registrar of Companies opposes the petition, arguing that the transferee-company should also participate in the petition and hold a meeting of its shareholders to approve the scheme. The petitioner contends that all shareholders of the transferee-company have consented to the amalgamation, making the petition valid without the transferee-company's direct involvement.

Reference is made to a previous decision highlighting the necessity for both amalgamating companies to comply with statutory requirements, including holding shareholder meetings. However, in the present case, all shareholders of the transferor-company and the transferee-company have consented to the scheme. The court emphasizes that the scheme is beneficial, and the objection raised is a technical one regarding the meeting of the transferee-company's shareholders.

The court concludes that the transferee-company should also hold a statutory meeting of its shareholders, despite the absence of a specific rule in the Companies (Court) Rules. The petition is not dismissed but adjourned to allow the transferee-company to fulfill the statutory requirements, given that all shareholders have already consented to the amalgamation.

In summary, the court acknowledges the necessity for the transferee-company to conduct a shareholder meeting but opts to keep the petition pending to provide an opportunity for compliance, considering the unanimous consent of all shareholders involved in the proposed amalgamation.