2020 (10) TMI 1109 - Tri - Companies Law

Sanction of Scheme of amalgamation - section 230-232 of Companies Act, 2013 - HELD THAT - The present Scheme is an arrangement between the Transferor Company No.1, Transferor Company No.2 and their shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no Compromise and/or Arrangement with creditors as no sacrifice is called for. The rights of the creditors will not be affected at all. The copy of the Scheme is annexed as Exhibit- O1 to the Application. In view of the fact that the Applicant Companies have obtained consent affidavits from all their creditors, the meetings of the respective creditors of the Applicant Companies are hereby dispensed with as prayed for - Directions for various meetings to be convened issued - scheme sanctioned.

Issues:
1. Approval of Scheme of Amalgamation
2. Share Capital Details
3. Rationale for the Scheme
4. Creditor Confirmation
5. Meeting of Equity Shareholders
6. Increase in Authorised Share Capital
7. Appointment of Chairperson
8. Notice to Regulatory Authorities

1. Approval of Scheme of Amalgamation:
The Tribunal considered the Scheme of Arrangement and Amalgamation between three companies and their respective shareholders and creditors. The Board of Directors of the companies had approved the Scheme with the Appointed Date as 7th June, 2019. The Scheme aimed at achieving operational efficiency, simplifying group structure, enhancing net worth, optimal resource utilization, and eliminating duplication of entities.

2. Share Capital Details:
The authorized, issued, subscribed, and paid-up share capital of the companies involved in the Scheme was outlined. Specific details regarding the share capital of each company were provided, including the number of equity shares and their respective values.

3. Rationale for the Scheme:
The rationale behind the Scheme was explained by the counsel, emphasizing operational and management efficiency, consolidation of group structure, enhancement of net worth, resource optimization, and reduction in compliance costs through the elimination of multiple entities within the group.

4. Creditor Confirmation:
Confirmation from secured and unsecured creditors of all companies involved in the Scheme was obtained through affidavits. The creditors had agreed to the Scheme of amalgamation, ensuring that their rights would not be affected by the proposed arrangement.

5. Meeting of Equity Shareholders:
The Tribunal ordered the convening of a meeting of the Equity Shareholders to consider and approve the proposed Scheme of Amalgamation. Notice of the meeting was to be issued to all shareholders, along with relevant documents, at least 30 days before the meeting date. The notice was also required to be published in newspapers and on the companies' websites.

6. Increase in Authorised Share Capital:
As the current paid-up share capital of the transferee company was up to the authorized capital, any issuance of additional shares necessitated an increase in authorized share capital. The Tribunal directed the company to pass a resolution in accordance with the Companies Act to facilitate the allotment of further shares.

7. Appointment of Chairperson:
A Company Secretary was appointed as the Chairperson for the Equity Shareholders' meeting to oversee the proceedings, including sending out meeting notices and making decisions as per the Articles of Association and relevant rules.

8. Notice to Regulatory Authorities:
The companies were instructed to serve notices to regulatory authorities, including the Regional Director, Registrar of Companies, and Income Tax Authority, as per legal requirements. Non-response within 30 days would imply no objection to the Scheme. Additionally, the Official Liquidator was to be notified, and assistance from Chartered Accountants was appointed to scrutinize the books of accounts.

In conclusion, the Tribunal approved the Scheme of Amalgamation subject to various conditions and directed the companies to comply with the necessary procedures and notifications as per the Companies Act and relevant rules.

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