2021 (1) TMI 521 - Tri - Companies Law

Approval of scheme of Amalgamation - seeking orders dispensing with the meetings of its Shareholders, Secured Creditors in respect of 1st Petitioner Company only as 2nd Petitioner Company did not have any Secured Creditors and also Meetings of Unsecured Creditors of both Companies - HELD THAT - As required under Rule 16 of the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 has been affected in two Newspapers, i.e., the Indian Express (English) dated 08.12.2020 and Mathrubhumi (Malayalam) dated 10.12.2020 and no one has filed objection against the Scheme of Amalgamation of the Petitioner Companies. This Bench is of the view that the Scheme placed before this Bench on 16.10.2020 can be sanctioned. Hence, this Tribunal Sanction the Scheme of Amalgamation of M/s. Kunnath Paper Mills Private Limited with M/s. Mundassery Board and Paper Mills Private Limited and the Appointed Date of the Scheme is fixed as opening hours of 01stApril, 2020 - The Petitioner Companies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically in E-Form INC-28, in addition to producing physical copy within 30 (thirty) days from the date of issuance of the order by the Registry - Transferee Company is directed to comply with the provisions of Section 232 (3) (i) of the Companies Act, 2013 by making an application with Registrar of Companies, Kerala for payment of the balance fee as applicable under the provisions of Acts and Rules framed thereunder.

Summary

Issues Involved:
1. Sanctioning the Scheme of Amalgamation.
2. Exemption from advertisement.
3. Transfer of assets and liabilities.
4. Issuance of shares.
5. Combination of authorized share capital.
6. Benefits of amalgamation.
7. Compliance with statutory requirements.
8. Filing of amended Memorandum of Association (MoA) and Articles of Association (AoA).

Detailed Analysis:

1. Sanctioning the Scheme of Amalgamation:
The Tribunal sanctioned the Scheme of Amalgamation of M/s. Mundassery Board and Paper Mills Private Limited (Transferor Company) with M/s. Kunnath Paper Mills Private Limited (Transferee Company). The appointed date for the scheme was fixed as April 1, 2020. The scheme was approved by the Board of Directors and shareholders of both companies in their meetings held on August 4, 2020, and August 17, 2020, respectively.

2. Exemption from Advertisement:
The petitioners sought exemption from issuing advertisements under Rule 16(1) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Tribunal had previously granted relief by dispensing with the meetings of shareholders and creditors based on consent obtained.

3. Transfer of Assets and Liabilities:
The entire business, including all movables, immovables, assets, licenses, rights, privileges, claims, debts, liabilities, duties, and obligations of the Transferor Company, were to be transferred to the Transferee Company without any further act or deed, effective from the appointed date.

4. Issuance of Shares:
In consideration for the transfer of assets and liabilities, the Transferee Company was to issue and allot 80 equity shares of ?100 each fully paid up for every 10 equity shares of ?100 each held in the Transferor Company. The equity shares held by the Transferor Company in the Transferee Company were to stand canceled without any further act or deed.

5. Combination of Authorized Share Capital:
Upon sanction of the scheme, the authorized share capital of the Transferee Company would automatically stand increased by merging the authorized share capital of the Transferor Company. The Transferee Company was to take necessary steps to further increase and alter its authorized share capital to issue and allot the equity shares as per the scheme.

6. Benefits of Amalgamation:
The amalgamation aimed to pool resources for common purposes, realize substantial benefits of greater synergies, achieve management efficiency, reduce administrative costs, optimize resources, improve profitability, and strengthen the balance sheet of the merged company. It was expected to result in higher retained earnings, enhanced intrinsic value of shareholding, and stronger fundamentals for better credit rating and resource-raising ability.

7. Compliance with Statutory Requirements:
The Tribunal directed the petitioner companies to comply with various statutory requirements, including filing a copy of the order and the scheme with the Registrar of Companies electronically in E-Form INC-28 within 30 days, and making an application with the Registrar of Companies, Kerala, for payment of the balance fee as applicable under Section 232(3)(i) of the Companies Act, 2013.

8. Filing of Amended Memorandum of Association (MoA) and Articles of Association (AoA):
The Transferee Company was directed to file the amended MoA and AoA with the Registrar of Companies, Kerala. Additionally, the petitioner companies were required to lodge a copy of the order with the concerned Superintendent of Stamps for adjudication of stamp duty payable within 60 days.

Conclusion:
The Tribunal sanctioned the Scheme of Amalgamation, directing all concerned regulatory authorities to act on the receipt of a copy of the order along with the scheme. The petitioner companies were instructed to comply with the provisions of the Companies Act, 2013, and make necessary filings and applications as required. The CP (CAA)/07/KOB/2020 was disposed of with the sanction of the scheme.