2020 (10) TMI 1110 - Tri - Companies Law

Sanction of scheme of amalgamation - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - As per the petition, the scheme in question will help in optimum and efficient utilization of resources either in the form of assets and sharing of ancillary facilities, benefit by obtaining synchronization of synergies, etc. - the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and that the scheme of amalgamation can be sanctioned. The scheme of amalgamation (as annexed with this petition) is hereby sanctioned and the appointed date of the scheme shall be April 1, 2019.

Issues Involved:
1. Approval of the scheme of amalgamation under sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and regulations, including FEMA/RBI guidelines, Income-tax dues, and related party transactions.
3. Impact on creditors and shareholders.
4. Procedural compliance and approvals from regulatory authorities.
5. Transfer of liabilities and pending proceedings.
6. Compliance with Competition Act, 2002.

Issue-wise Detailed Analysis:

1. Approval of the Scheme of Amalgamation:
The petitioners, M/s. HCL Technologies Solutions Ltd. (transferor company-III) and M/s. Concept2Silicon Systems P. Ltd. (transferor company-IV), filed a joint petition under sections 230 to 232 of the Companies Act, 2013, seeking sanction of the scheme of amalgamation. The scheme was approved by the boards of directors of the petitioner-companies on May 10, 2019, and the appointed date of the scheme was set as April 1, 2019. The scheme aims to achieve benefits such as efficient utilization of resources, synchronization of efforts, and reduction in legal and regulatory compliances.

2. Compliance with Statutory Requirements and Regulations:
The Registrar of Companies and the Regional Director (SER), MCA, Hyderabad, raised several compliance issues. The petitioner-companies responded by undertaking to comply with section 232(3)(i) of the Companies Act, 2013, and pay the requisite fees on the increased authorized share capital. They also confirmed compliance with FEMA/RBI guidelines, stating that the activities of the transferor and transferee companies are permitted under the automatic route. Regarding Income-tax dues, the petitioner-companies undertook to pay pending dues subject to the final outcome of ongoing proceedings.

3. Impact on Creditors and Shareholders:
The scheme does not involve any arrangement to reduce or extinguish the liabilities of creditors. The meetings of equity shareholders were convened and the scheme was unanimously approved. The Tribunal had earlier dispensed with the meetings of unsecured creditors. The scheme is stated to be in the best interests of the transferor and transferee companies, their shareholders, and creditors.

4. Procedural Compliance and Approvals from Regulatory Authorities:
The Tribunal directed the issuance of notices to various regulatory authorities and publication of the notice of hearing in newspapers. The Registrar of Companies, Karnataka, and the Regional Director (SER), MCA, Hyderabad, provided their observations. The petitioner-companies furnished affidavits confirming compliance with these directions. The Competition Commission of India (CCI) stated that the scheme did not require its approval as the transferor companies are wholly-owned subsidiaries of the transferee company.

5. Transfer of Liabilities and Pending Proceedings:
All liabilities, including taxes, levies, and charges, of the petitioner-companies will be transferred to the transferee company. Pending proceedings, including taxation proceedings, will continue against the transferee company. The official liquidator's report confirmed that the affairs of the transferor companies were not conducted prejudicially to the interests of the members or public.

6. Compliance with Competition Act, 2002:
The petitioner-companies stated that the proposed amalgamation is outside the purview of the Competition Act, 2002, as all transferor companies are direct/indirect wholly-owned subsidiaries of the transferee company. Therefore, no prior approval from the CCI was required.

Conclusion:
The Tribunal sanctioned the scheme of amalgamation with the appointed date of April 1, 2019. The order specified that the sanction should not be construed as an exemption from payment of stamp duty, taxes, or other charges. The petitioner-companies are required to comply with all statutory requirements, including filing due statutory returns and ensuring compliance with FEMA/RBI guidelines. The order also directed the transfer of books of account and other relevant documents to the transferee company and allowed any person to apply to the Tribunal for necessary directions. The petition was disposed of along with any pending interlocutory applications.

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