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2012 (10) TMI 193 - HC - Companies LawScheme of arrangement (Demerger) - insufficient authorized share capital of the resulting company to accommodate allotment of equity shares to the shareholders of the demerged company as per report of Regional Director, Northern Region, MCA - Held that - In response to the affidavit filed by the Regional Director, Northern Region, the petitioner companies through its Director, Mr. Ashwani Khurana, filed a reply on September 29, 2012 stating that there was a typing error in the valuation report submitted to the office of Regional Director, N.R. and the present authorized share capital of the resulting company is adequate and sufficient to allot equity shares to the shareholders of the demerged company. Also the petitioner company has not been done any wrong, nor is the purpose of the demerger to destroy evidence of any nature. He undertakes to cooperate in investigation, if any, ordered against the company. As no objection has been received to the Scheme of Arrangement (Demerger) from any other party. The petitioner companies have filed the affidavit dated 28th September, 2012 through Mr.Ashwani Khurana, Director submitting that he has not received any objection pursuant to the citations published on 18th August, 2012, and also Deputy Registrar of Companies appearing for Regional Director (Northern Region) has also stated that he has no objection to the present Scheme of Arrangement (Demerger) being sanctioned by this Court, thus the Scheme of Arrangement (Demerger) is hereby approved/sanctioned under Sections 391 and 394 of the Companies Act, 1956 - Resulting Company would deposit a sum of Rs.1,00,000/- in the Common Pool Fund of the Official Liquidator within three weeks from today.
Issues:
1. Sanction of Scheme of arrangement (Demerger) under Sections 391 and 394 of the Companies Act, 1956. Analysis: The petitioners, two companies, filed a joint petition seeking approval of a Scheme of arrangement (Demerger) under Sections 391 and 394 of the Companies Act, 1956. The Scheme involved the demerger of M/s Kanchenjunga Advertising Private Limited (Demerged Company) and M/s Karma Lakelands Private Limited (Resulting Company), both having their registered offices in New Delhi. The companies were incorporated in 1982 and 1986, respectively. The Scheme aimed at reducing overheads, streamlining operations, and enhancing productivity by merging the two entities under the same management and control. The authorized share capital of the Demerged Company was Rs.1,00,00,000 divided into 1,00,000 equity shares, while that of the Resulting Company was Rs.12,15,00,000 divided into 1,21,50,000 equity shares. The Share exchange ratio proposed in the Scheme was 12.396 equity shares of Rs.10 each of the Resulting Company for every 1 equity share of Rs.100 each held in the Demerged Company. Both companies had their Memorandum and Articles of Association filed, along with audited Balance Sheets as of March 31, 2011. The Board of Directors of both companies unanimously approved the Scheme in meetings held on July 31, 2011. The court had earlier dispensed with the requirement of convening meetings of shareholders and creditors. Shareholders of both companies approved the Scheme in meetings held on April 7, 2012. The Regional Director, Ministry of Corporate Affairs, submitted a report stating that employees of the Demerged Company would seamlessly transition to the Resulting Company post-demerger. After considering submissions and reports, the court approved the Scheme of arrangement (Demerger) under Sections 391 and 394 of the Companies Act, 1956. The Regional Director had no objections to the Scheme. The Resulting Company agreed to deposit a sum of Rs.1,00,000 in the Common Pool Fund of the Official Liquidator. The court directed compliance with statutory requirements and payment of stamp duty or taxes as per law. The demerger was to be effective from April 1, 2011, with the printing division of the Demerged Company transferring to the Resulting Company. In conclusion, the court allowed the petition, and a certified copy of the order was to be filed with the Registrar of Companies within 30 days.
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