2022 (3) TMI 365 - Tri - Companies Law

Sanction of Composite Scheme of Arrangement - section 230-232 of Companies Act - HELD THAT - Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

Issues Involved:

1. Approval of Composite Scheme of Arrangement between Transferor Company (FCSL) and Transferee Company (FTL).
2. Reduction of Share Capital in Transferee Company (FTL).
3. Dispensing of meetings for Equity and Preference Shareholders.
4. Dispensing of meetings for Secured and Unsecured Creditors.
5. Service of notice to regulatory authorities and creditors.

Issue-wise Detailed Analysis:

1. Approval of Composite Scheme of Arrangement:

The Tribunal convened via video conferencing to consider the Composite Scheme of Arrangement between Forbes Campbell Services Limited (Transferor Company) and Forbes Technosys Limited (Transferee Company). The Board of Directors of both companies approved the Scheme on 27th December 2021, with the Appointed Date as 1st October 2021. The Scheme aims to amalgamate the Transferor Company into the Transferee Company to achieve synergy benefits, reduce overheads, and avoid duplication of efforts.

2. Reduction of Share Capital in Transferee Company:

The rationale for reducing the share capital in the Transferee Company includes adjusting the relation between capital and assets to reflect the financial position accurately. The reduction aims to improve financial ratios and attract investors by enhancing dividend-paying ability. The Scheme proposes to cancel a substantial number of equity and preference shares, paying a nominal consideration of Re. 0.001 per share cancelled.

3. Dispensing of Meetings for Equity and Preference Shareholders:

As of 31st December 2021, all equity shareholders of both Applicant Companies have given written consent to the proposed Scheme. Therefore, the Tribunal dispensed with the requirement to hold meetings for the equity shareholders of both companies. Similarly, all preference shareholders of the Second Applicant Company provided written consent, leading to the dispensation of their meeting as well.

4. Dispensing of Meetings for Secured and Unsecured Creditors:

The First Applicant Company has no secured creditors, and thus, no meeting is required. The Second Applicant Company has two secured creditors, and since the Scheme does not involve any compromise with creditors, their meeting is also dispensed with, provided the company obtains consent affidavits from at least 90% in value of the secured creditors. The Second Applicant Company has 231 unsecured creditors, and similar to the secured creditors, their meeting is dispensed with due to the nature of the Scheme. However, notices must be served to all unsecured creditors.

5. Service of Notice to Regulatory Authorities and Creditors:

Both Applicant Companies are directed to serve notices to various regulatory authorities, including the Central Government, Registrar of Companies, Income Tax Authority, Official Liquidator, and GST Authority. If no response is received within 30 days, it will be presumed that these authorities have no objection to the Scheme. Additionally, the Tribunal appointed a Chartered Accountant to assist the Official Liquidator in scrutinizing the books of accounts of the Transferor Company for the last five years.

Conclusion:

The Tribunal ordered the Applicant Companies to file Affidavits of Service proving the dispatch of notices to creditors and regulatory authorities, confirming compliance with the Tribunal's directions. The Scheme is approved subject to the conditions and directions outlined in the judgment.

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