2020 (9) TMI 1086 - Tri - Companies Law

Approval of the Scheme of Amalgamation and Arrangement - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - The objections/observations to the Scheme received from RD, RoC, OL, BSE, NSE, IT Department and the Workers Union have been adequately replied by the Petitioner Company and hence, there is no impediment in the sanction of the Scheme. The Scheme is approved and we hereby declare the same to be binding on all the shareholders and creditors of the Petitioner Companies and on all concerned. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law. With the sanction of the Scheme, the Transferor Companies shall stand dissolved without undergoing the process of winding up. The scheme is approved.

Issues Involved:
1. Approval of the Scheme of Amalgamation and Arrangement.
2. Compliance with statutory requirements and procedural directions.
3. Objections from statutory authorities and stakeholders.
4. Impact on employees and ongoing litigations.
5. Tax implications and compliance.

Issue-wise Detailed Analysis:

1. Approval of the Scheme of Amalgamation and Arrangement:
The petition was filed under Sections 230 to 232 of the Companies Act, 2013, for the approval of the Scheme of Amalgamation between GlaxoSmithKline Consumer Healthcare Limited (Transferor Company) and Hindustan Unilever Limited (Transferee Company). The Scheme was approved by 100% of the unsecured creditors and 99.9% of the equity shareholders of the Transferor Company. The Share Exchange Ratio was determined as 439 equity shares of HUL for 100 equity shares held in GSK CH.

2. Compliance with Statutory Requirements and Procedural Directions:
The First Motion Application directed the convening of meetings for equity shareholders and unsecured creditors, with the secured creditors' meeting dispensed. Compliance affidavits and reports were submitted, confirming adherence to the Tribunal's directions. Notices were served to relevant authorities, and public notices were published. Affidavits confirmed no objections were received from statutory authorities or sectoral regulators.

3. Objections from Statutory Authorities and Stakeholders:
The Registrar of Companies (RoC) and Regional Director (RD) submitted no separate report, relying on their earlier submission, confirming no prosecutions or investigations against the Transferor Company. The Income Tax Department highlighted pending tax assessments and demanded compliance with tax laws. The Official Liquidator (OL) and Workers Union raised concerns about the Scheme's impact on employees and ongoing litigations. The Tribunal found that the Transferor Company adequately addressed these objections.

4. Impact on Employees and Ongoing Litigations:
The Scheme ensured no change in service conditions for employees of the Transferor Company, maintaining continuity of service with the Transferee Company. The Tribunal referenced decisions from the Supreme Court and High Courts, confirming that employees' interests were safeguarded. Ongoing litigations, including those before the Labour Commissioner, would continue against the Transferee Company.

5. Tax Implications and Compliance:
The Income Tax Department required undertakings from the companies to comply with tax laws. The Tribunal noted that the Transferee Company would handle all tax liabilities and ongoing assessments. The Scheme's approval did not exempt the companies from paying taxes or complying with legal requirements.

Conclusion:
The Tribunal approved the Scheme, binding it on all shareholders and creditors of the Petitioner Companies. The Transferor Company would dissolve without winding up, and its assets and liabilities would transfer to the Transferee Company. The order clarified that it did not exempt the companies from paying taxes or complying with other legal requirements. The Transferor Company was directed to deposit a specified amount with the Regional Director and file the schedule of properties for formal orders.

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