2020 (10) TMI 15 - Tri - Companies Law

Sanction of Composite Scheme of Amalgamation of wholly owned subsidiaries - sections 230-232 of the Companies Act, 2013 read with Companies (Compromises, Arrangement Amalgamations) Rules, 2016 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Company Petition is made absolute in terms of prayers in the Petition. The Scheme is hereby sanctioned with the Appointed Date fixed as 1st April 2019 - The Transferor Companies shall stand dissolved without the process of winding up.

Summary

Issues Involved: Sanction of Composite Scheme of Amalgamation, Compliance with statutory requirements, Objections by creditors, Protection of creditors' interests, Approval by requisite majority, Compliance with Accounting Standards, Effective and Appointed Dates, Dissolution of Transferor Companies.

Detailed Analysis:

1. Sanction of Composite Scheme of Amalgamation:
The Tribunal was convened via videoconference and considered the sanction of the Composite Scheme of Amalgamation under sections 230-232 of the Companies Act, 2013. The scheme involved the amalgamation of wholly-owned subsidiaries (Transferor Companies) into the holding company (Transferee Company). The Petitioner Companies had approved the scheme through board resolutions on March 15, 2019, and filed necessary affidavits of compliance.

2. Compliance with Statutory Requirements:
The Petitioner Companies undertook to comply with all statutory requirements under the Companies Act, 2013, and relevant rules. The Regional Director (Western Region) filed a report emphasizing compliance with Accounting Standards (AS-14, Ind AS-103) and other applicable standards. The Tribunal accepted the clarifications and undertakings provided by the Petitioner Companies regarding compliance with these standards and statutory requirements.

3. Objections by Creditors:
Two creditors, Famous Digital Studios Private Limited and JC Decaux Advertising India Private Limited, raised objections regarding outstanding debts. The Tribunal noted that the objections were primarily concerned with securing repayment rather than opposing the scheme itself. The Tribunal highlighted that the objectors' debts did not meet the 5% threshold required under section 230(4) of the Companies Act, 2013, to sustain an objection.

4. Protection of Creditors' Interests:
The Tribunal emphasized that the scheme did not diminish the liability towards any creditor and that the interests of the creditors were sufficiently protected. The objecting creditors were free to pursue appropriate legal proceedings for debt recovery, and the sanction of the scheme would not render them remediless.

5. Approval by Requisite Majority:
The Regional Director's report confirmed that the scheme was approved by the requisite majority of members and creditors as per section 230(6) of the Companies Act, 2013. The meetings of Equity Shareholders were dispensed with due to consent affidavits from all shareholders, and notices were sent to all unsecured creditors.

6. Compliance with Accounting Standards:
The Petitioner Companies undertook to comply with AS-14 (Ind AS-103) and other applicable Accounting Standards such as AS-5 (Ind AS-8) in connection with the scheme. The Tribunal accepted these undertakings.

7. Effective and Appointed Dates:
The scheme specified the "Appointed Date" as April 1, 2019, or such other date as approved by the Tribunal. The "Effective Date" would be the date on which all necessary approvals were obtained, and the scheme became effective from the Appointed Date. The Tribunal confirmed that this complied with section 232(6) of the Companies Act, 2013.

8. Dissolution of Transferor Companies:
The Official Liquidator's report stated that the affairs of the Transferor Companies were conducted properly and not prejudicial to shareholders' interests. The Tribunal ordered the dissolution of the Transferor Companies without winding up.

Conclusion:
The Tribunal found the scheme to be fair, reasonable, and not in violation of any law or public policy. All requisite statutory compliances were fulfilled, and the scheme was sanctioned with the Appointed Date fixed as April 1, 2019. The Petitioner Companies were directed to lodge certified copies of the order and scheme with the concerned authorities within specified timeframes. The file was consigned to records, and any interested person was allowed to apply to the Tribunal for necessary directions.