2015 (5) TMI 196 - HC - Companies Law

Application under Sections 391 & 394 of the Companies Act, 1956 - Dispensation with the requirement of convening the meetings of their equity shareholders, secured and unsecured creditors - Held that - In all the 13 companies (transferor companies) and transferee company , all equity share holders, Unsecured creditors and Secured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meeting of the equity shareholders of the all the transferor companies to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. - The application approved.

Issues Involved:
1. Dispensation of meetings for equity shareholders, secured and unsecured creditors.
2. Approval of the Scheme of Amalgamation.
3. Share exchange ratio.
4. Pending proceedings under Sections 235 to 251 of the Companies Act, 1956.
5. Approval by the Board of Directors.
6. Consents/no objections from equity shareholders and unsecured creditors.

Detailed Analysis:

1. Dispensation of Meetings for Equity Shareholders, Secured and Unsecured Creditors:
The applicant companies sought directions to dispense with the requirement of convening meetings of their equity shareholders, secured and unsecured creditors to consider and approve the proposed Scheme of Amalgamation. The court examined the consents/no objections submitted by the equity shareholders and unsecured creditors of each transferor company and the transferee company. Since all consents/no objections were in order, the court dispensed with the requirement of convening these meetings.

2. Approval of the Scheme of Amalgamation:
The Scheme of Amalgamation involved the merger of thirteen transferor companies with one transferee company. The court noted that the registered offices of all companies were situated in New Delhi, falling within its jurisdiction. The Scheme aimed at pooling financial, commercial, and other resources, achieving economies of scale, and reducing overheads. The court found the Scheme beneficial as it would enhance the capabilities and resources of the transferee company, allowing for greater flexibility and growth.

3. Share Exchange Ratio:
The Scheme provided specific share exchange ratios for the shareholders of each transferor company. For example, "82 equity shares of Rs. 10/- each of the transferee company, credited as fully paid up, for every 100 equity shares of Rs. 10/- each held in the transferor company no. 1." Similar ratios were detailed for the other transferor companies. The court reviewed these ratios and found them acceptable.

4. Pending Proceedings Under Sections 235 to 251 of the Companies Act, 1956:
The applicants submitted that no proceedings under Sections 235 to 251 of the Companies Act, 1956 were pending against any of the applicant companies. The court acknowledged this submission and found no legal impediments to the approval of the Scheme.

5. Approval by the Board of Directors:
The Board of Directors of each transferor and transferee company had unanimously approved the proposed Scheme of Amalgamation in their meetings held on 9th February, 2015. Copies of the Resolutions passed at these meetings were placed on record and examined by the court, confirming the unanimous approval.

6. Consents/No Objections from Equity Shareholders and Unsecured Creditors:
The court reviewed the consents/no objections from the equity shareholders and unsecured creditors of each transferor company and the transferee company. For instance, the transferor company no. 1 had 02 equity shareholders who provided their consents/no objections in writing. Similar consents were obtained from the equity shareholders and unsecured creditors of other transferor companies and the transferee company. The court found all consents/no objections in order and dispensed with the requirement of convening meetings.

Conclusion:
The court allowed the application, dispensing with the requirement of convening meetings of equity shareholders and unsecured creditors for all transferor and transferee companies. The Scheme of Amalgamation was approved, considering it beneficial for pooling resources, achieving economies of scale, and facilitating growth. The share exchange ratios were accepted, and no pending legal proceedings were found against the applicant companies.

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