2021 (7) TMI 616 - Tri - Companies Law

Sanction of scheme of amalgamation - seeking dispensation of the meeting of Equity Shareholders, creditors of the Applicant Companies for the proposed scheme of amalgamation - Section 230-232 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - Various directions regarding holding and convening as well as dispensation of various meetings issued - directions regarding issuance of various notices also issued. Application allowed.

Summary

Issues:
Dispensation of meeting of Equity Shareholders and creditors for proposed scheme of amalgamation under Sections 230-232 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

Analysis:
The judgment by the National Company Law Tribunal, Ahmedabad Bench, involved a joint application by two companies, namely, M/s. Swayambhu Leasing and Finance Limited (Transferor Company) and M/s. Himson Knitting Industries Private Limited (Transferee Company), seeking dispensation of meetings of Equity Shareholders and creditors for a proposed scheme of amalgamation. The Transferor Company, an Unlisted Public Limited Company, has a share capital of ?48,00,000 divided into 48,000 equity shares of ?10 each. On the other hand, the Transferee Company, an Unlisted Private Limited Company, has a share capital of ?34,25,100 divided into 34,251 equity shares of ?10 each. Both companies are located in the State of Gujarat, under the jurisdiction of the National Company Law Tribunal, Ahmedabad.

The application detailed that the Transferor Company is not registered with the Reserve Bank of India and has no business activity for over a decade. The proposed amalgamation aims to leverage combined assets, reduce managerial overlaps, increase operational efficiency, and provide greater cash management for growth opportunities. The Board of Directors of both companies approved the scheme, and a Valuation Report on Equity Share Exchange ratio was obtained from a registered valuer. The application confirmed no pending investigations under relevant sections of the Companies Act, 2013, and compliance with accounting standards. It was also stated that the Competition Commission Act, 2002, and FEMA Act provisions did not apply to the scheme due to the absence of foreign shareholders.

The application further provided details of shareholders and creditors of both companies, with consent affidavits from all shareholders and confirmation of no Secured Creditors in either company. While the Transferor Company had no Unsecured Creditors, the Transferee Company had 42 Unsecured Creditors, with over 90% consenting to the scheme. Based on the submissions and material on record, the Tribunal granted the following reliefs: dispensation of Equity Shareholders and Secured Creditors meetings for both companies, and Unsecured Creditors meeting for the Transferor Company. The meeting of Unsecured Creditors for the Transferee Company was also dispensed with due to consent from the majority. Additionally, the Tribunal directed the companies to send notices to relevant authorities in compliance with statutory rules.

In conclusion, the Tribunal allowed the company application, disposing of it accordingly, and directed the issuance of an urgent certified copy of the order upon compliance with formalities.