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2015 (5) TMI 693 - HC - Companies LawApplication for Composite Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 - Regional Director s observations regarding compliance of provisions of the Companies Act, 1956 /2013 regarding name change duly addressed - Held that - Although no objection has been raised by the Regional Director in his report, but in para 10 of his report, he has observed that as per Clause 11 of Part-V of the Scheme, it has been stated that with effect from the effective date, the name of the transferee company shall stand changed to Mindchampion Learning Systems Limited or such other name as may be approved by the Registrar of Companies, Delhi & Haryana. He, therefore, prays that the petitioner company may be directed to comply with the provisions of the Companies Act, 1956/2013 in this regard. In reply to the aforesaid observation, the transferee company in the affidavit dated 14th April, 2015 of Mr. Ashok Arora, authorized signatory of the transferee company, have undertaken to comply with the relevant procedures under the Companies Act, 1956/2013 with regard to the change of name of the transferee company. The undertaking is accepted and the petitioner company shall remain bound by the same. In view of the above, the observation raised by the Regional Director stands satisfied. No objection has been received to the Composite Scheme of Arrangement from any other party. The petitioner companies, in the affidavit dated 8th April, 2015 of Mr. Ashok Arora, authorized signatory of the petitioner companies, have submitted that neither the petitioner companies nor their counsel have received any objection pursuant to the citations published in the newspapers on 14th March, 2015. Considering the approval accorded by the shareholders and creditors of the petitioner companies to the proposed Composite Scheme of Arrangement and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection to the proposed Composite Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Composite Scheme of Arrangement. Consequently, sanction is hereby granted to the Composite Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956. - Application for Scheme of Arrangement approved.
Issues Involved:
1. Sanction of Composite Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956. 2. Compliance with statutory requirements and procedural aspects. 3. Share exchange ratio and consideration. 4. Employee transfer and accounting standards. 5. Change of name of the transferee company. 6. Objections and approvals from shareholders, creditors, Regional Director, and Official Liquidator. 7. Costs imposed on petitioner companies. Issue-wise Detailed Analysis: 1. Sanction of Composite Scheme of Arrangement: The petitioners sought the court's sanction for a Composite Scheme of Arrangement involving amalgamation and demerger among NIIT Limited, Evolv Services Limited, Scantech Evaluation Services Limited, NIIT Online Learning Limited, and Hole-in-the-Wall Education Limited. The scheme aimed to amalgamate the wholly-owned subsidiaries into the parent company and demerge the School Business Undertaking into the transferee company, enhancing operational synergies and creating a focused entity for the school segment. 2. Compliance with Statutory Requirements and Procedural Aspects: The registered offices of all involved companies were within the jurisdiction of the Delhi High Court. The petitioners complied with the procedural requirements, including filing the Memorandum and Articles of Association, audited balance sheets, and the Composite Scheme of Arrangement. The Board of Directors of the involved companies unanimously approved the scheme in their meetings on 26th August 2014. The court had earlier dispensed with the requirement of convening meetings for certain stakeholders and directed the convening of separate meetings for others. 3. Share Exchange Ratio and Consideration: The scheme specified that no consideration would be payable by the amalgamated company for the amalgamation of wholly-owned subsidiaries. A lump sum consideration of Rs. 1,08,06,40,649/- would be payable by the transferee company for the demerger of the School Business Undertaking. 4. Employee Transfer and Accounting Standards: The scheme provided that all employees of the amalgamating companies would become employees of the amalgamated company without any break in service. The accounting for the amalgamation and treatment of goodwill and reserves would comply with Accounting Standard-14. 5. Change of Name of the Transferee Company: The Regional Director noted that the scheme included a provision to change the name of the transferee company to Mindchampion Learning Systems Limited or another approved name. The transferee company undertook to comply with the relevant procedures under the Companies Act for the name change. 6. Objections and Approvals from Shareholders, Creditors, Regional Director, and Official Liquidator: The court received no objections from shareholders, creditors, or other parties. The Official Liquidator and the Regional Director did not raise objections, stating that the affairs of the companies were not conducted prejudicially. The Regional Director's observation regarding the name change procedure was addressed by the transferee company's undertaking to comply with statutory requirements. 7. Costs Imposed on Petitioner Companies: The court imposed a cost of Rs. 3,00,000/- on the petitioner companies, to be deposited in the Common Pool Fund of the Official Liquidator, considering the examination of voluminous records and prioritized hearings. Conclusion: The court granted sanction to the Composite Scheme of Arrangement, directing the petitioner companies to comply with statutory requirements and file a certified copy of the order with the Registrar of Companies within 30 days. The order clarified that it did not exempt the companies from paying applicable stamp duty. The scheme would become effective from 1st April 2014, resulting in the dissolution of the amalgamating companies without winding up and the merger of the School Business Undertaking into the transferee company. The petition was allowed in the specified terms.
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