2009 (11) TMI 509 - HC - Companies Law

Amalgamation scheme - Held that - Allow this petition and grant sanction to the proposed scheme of arrangement/amalgamation as prayed, however, with a modification to the extent that the appointed date for amalgamation will be 1-1-2010 in place of 1-4-2009. The sanction to the scheme of amalgamation shall not anyway dispense with the requirement of execution of any instrument necessary for vesting of property and the rights of the transferor and transferee-companies. Shri Vijayesh Atre, learned counsel appearing for the Companies has stated that the transferor-company is ready, willing and is agreed to pay as sum of ₹ 30,000 by demand draft to the Common Pool Fund maintained by the Official Liquidator attached to this Court. He submits that the same shall be paid within four weeks. The costs of ₹ 5,000 be paid to the Regional Director within four weeks. A separate order as required under rules 81 and 84 in Form Nos. 41 and 42 is, accordingly, passed.

Issues:
Petition under sections 391 and 394 of the Companies Act, 1956 for sanction of scheme of amalgamation involving three companies. Authorization of share capital, balance sheets, and main objectives of the companies. Meetings of shareholders and creditors held. Reports of Chairman and Regional Director reviewed. Approval of scheme sought.

Detailed Analysis:

1. Authorization of Share Capital and Balance Sheets:
The petition involves three companies seeking sanction for a scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956. Details of the authorized share capital and balance sheets of the Transferor-Company and the two Transferee-Companies are provided in the petition. The scheme aims to transfer assets and liabilities between the companies for the purpose of amalgamation.

2. Main Objectives of Companies and Grounds for Amalgamation:
The Transferor-Company is described as a profit-making entity engaged in plastic processing, solvent extraction, and refining of edible oil with multiple divisions. The scheme of amalgamation is sought to concentrate on core business activities, enhance scalability, optimize resources, facilitate expansion, and improve administrative efficiency. The objective is to achieve better profitability, economies of scale, and a stronger negotiating position with foreign collaborators.

3. Meetings of Shareholders and Creditors:
Prior to filing the petition, the companies convened meetings of equity shareholders and unsecured creditors as per the Companies Act. Reports from the Chairmans of the meetings indicated unanimous acceptance of the scheme by the respective shareholders and creditors. The scheme of amalgamation was confirmed and sanctioned by the appointed Chairmans.

4. Review by Regional Director and Court's Decision:
The Regional Director's report was submitted as required under section 394(A) of the Companies Act. The Court reviewed the report and found no adverse findings except for the lack of details of assets and liabilities, which were subsequently provided. The scheme was deemed not prejudicial to shareholders or the public. No objections were raised by the Regional Director or other concerned parties. The Court approved the scheme as it did not appear to have any infirmities or illegalities and was unanimously accepted by shareholders and creditors.

5. Sanction and Modifications:
The Court granted sanction to the proposed scheme of arrangement/amalgamation with a modification to the appointed date for amalgamation. The appointed date was changed to 1-1-2010 instead of 1-4-2009. The Court emphasized that the sanction did not dispense with the execution of necessary instruments for the transfer of property and rights between the companies.

6. Payment and Compliance:
The counsel for the companies confirmed readiness to pay a sum to the Common Pool Fund and the Regional Director as required by the Court. Orders were passed for compliance with the payment and submission of necessary forms in accordance with the rules.

This detailed analysis covers the key aspects of the judgment involving the sanction of the scheme of amalgamation between the three companies under the Companies Act, 1956.

← Previous Next →