2020 (10) TMI 338 - Tri - Companies Law

Approval of composite scheme of arrangement - section 230-232 of the Companies Act - HELD THAT - Directions issued for convening of various meetings - directions issued for service of notices - scheme approved - application allowed.

Issues Involved:
1. Composite Scheme of Arrangement
2. Rationale for the Scheme
3. Approval by Board of Directors
4. Conduct of Meetings
5. Notices and Advertisements
6. Appointment of Chairpersons
7. Quorum and Voting Procedures
8. Scrutinizer Appointment
9. Service of Notices to Regulatory Authorities
10. Official Liquidator’s Role
11. Compliance Reporting

Detailed Analysis:

1. Composite Scheme of Arrangement:
The scheme involves a composite arrangement between four companies: the demerged/transferee company, the resulting company, and two transferor companies. The scheme aims to reorganize the businesses for better management focus and efficiency.

2. Rationale for the Scheme:
The demerged company operates in both lifestyle and non-lifestyle businesses, which have different market segments and growth potentials. The scheme aims to segregate these businesses to enhance management focus, create independent, self-sustaining businesses, and attract different types of investors. The benefits include improved performance, increased investor confidence, and operational efficiencies.

3. Approval by Board of Directors:
The scheme was approved by the boards of directors of all applicant companies on various dates in November 2019. The appointed date for the scheme is fixed as April 1, 2020.

4. Conduct of Meetings:
Meetings of shareholders and creditors of the applicant companies are directed to be held on September 18, 2020, and September 22, 2020, respectively. Specific times and locations for these meetings are provided, and the purpose is to consider and approve the proposed arrangements.

5. Notices and Advertisements:
Notices for the meetings must be sent at least one month in advance to shareholders and creditors via various methods, including email. Notices must also be published in local newspapers and online due to the COVID-19 pandemic.

6. Appointment of Chairpersons:
Specific individuals are appointed as chairpersons for the meetings of equity shareholders and creditors. These chairpersons have the authority to conduct the meetings and make procedural decisions.

7. Quorum and Voting Procedures:
Quorum requirements are specified for each meeting. If the quorum is not met, the meetings will be adjourned by half an hour, and those present will constitute the quorum. Voting by proxy or authorized representative is permitted, and the value of shares and outstanding amounts will be determined as per the company’s books.

8. Scrutinizer Appointment:
A practicing company secretary is appointed as the scrutinizer for the meetings. The fee for the scrutinizer is set at ?1,00,000 excluding applicable taxes.

9. Service of Notices to Regulatory Authorities:
Notices along with a copy of the scheme must be served to various regulatory authorities, including the Central Government, Registrar of Companies, Income-tax authorities, and stock exchanges. These authorities have 30 days to submit their representations.

10. Official Liquidator’s Role:
The third and fourth applicant companies must serve notice to the Official Liquidator, High Court, Bombay. A chartered accountant is appointed to assist the official liquidator in scrutinizing the books of account for the last five years. The fee for this service is set at ?2,00,000.

11. Compliance Reporting:
The applicant companies must post the notices on their websites and file a compliance report with the Registry, proving the dispatch of notices and service to regulatory authorities. This report must be submitted instead of the customary affidavit of service due to the lockdown situation.

Order:
The order is pronounced in open court and directs the applicant companies to comply with the specified procedures and report back to the Tribunal.

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