2016 (8) TMI 1052 - HC - Companies Law

Scheme of Arrangement in the nature of amalgamation amongst the Petitioner Company and the Transferor Companies and their respective shareholders and creditors deserves to be granted. The Scheme of Amalgamation is hereby sanctioned. The same shall be binding upon all the Equity Shareholders, Secured Creditors, Unsecured Creditors of the Petitioner Company and all other agencies, departments and authorities of the Central, State and any other local authorities.

Summary

Issues:
1. Scheme of Arrangement for amalgamation under Sections 391 and 394 of the Companies Act, 1956.
2. Compliance with RBI guidelines and approval for amalgamation.
3. Compliance with FEMA and RBI guidelines for shareholding by Non Resident Indians (NRIs).
4. Share exchange ratio calculation and approval.
5. Approval from the Income Tax Department and compliance with Income Tax Act and Rules.

Analysis:
1. The Petitioner Company presented a Scheme of Arrangement for amalgamation between HBL Global Private Limited, Atlas Documentary Facilitators Private Limited, and HDB Financial Services Limited under Sections 391 and 394 of the Companies Act, 1956. The Scheme was approved by shareholders and creditors in meetings held as per court directions.

2. The Regional Director raised concerns regarding compliance with RBI guidelines and approval for amalgamation. The Petitioner Company provided a letter from RBI granting approval subject to conditions, ensuring compliance with terms and conditions mentioned therein. The court directed compliance with RBI guidelines.

3. The Regional Director also noted the shareholding by NRIs and requested compliance with FEMA and RBI guidelines. The Petitioner Company demonstrated compliance with regulations for share subscription from NRE/NRO accounts, addressing the Regional Director's concerns effectively.

4. Concerning the share exchange ratio calculation, the Regional Director sought details as the valuers did not recommend the ratio. The Petitioner Company explained that the median value of valuation reports was used to determine the share price, which was approved by shareholders, resolving the issue.

5. The Income Tax Department did not respond within the stipulated period, implying no objection to the Scheme. The court directed compliance with applicable provisions of the Income Tax Act and Rules. Overall, the court found the Scheme fair, reasonable, and compliant with legal requirements, sanctioning the amalgamation and binding all stakeholders.

Judgment:
The High Court of Gujarat sanctioned the Scheme of Arrangement for amalgamation, finding it fair, reasonable, and in compliance with the law. The court addressed all concerns raised by the Regional Director, ensuring compliance with RBI, FEMA, and Income Tax guidelines. The Petitioner Company was directed to pay professional charges and lodge necessary documents for Stamp Duty adjudication. Filing requirements with authorities were specified, and the Petition was allowed to the specified extent, concluding the legal proceedings satisfactorily.