2022 (5) TMI 535 - Tri - Companies Law

Sanction of the Scheme of Amalgamation - section 230(6) read with section 232(3) of the Companies Act, 2013 - 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 sanctioned - application allowed.

Issues Involved:
1. Sanction of the Scheme of Amalgamation under sections 230(6) and 232(3) of the Companies Act, 2013.
2. Compliance with statutory requirements and accounting standards.
3. Objections and observations by the Regional Director (RD) and Official Liquidator.
4. Payment of applicable stamp duty on the transfer of immovable properties.
5. Issuance and allotment of shares and handling of fractional entitlements.
6. Effective date and procedural compliance.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petition was filed under sections 230(6) and 232(3) of the Companies Act, 2013, seeking sanction for the Scheme of Amalgamation of the Transferor Companies with the Transferee Company, effective from April 1, 2018. The Scheme was unanimously approved by the Board of Directors of both companies on January 9, 2019. The amalgamation aims to integrate activities, streamline administration, and achieve economies of scale, among other benefits.

2. Compliance with Statutory Requirements and Accounting Standards:
The statutory auditor confirmed that the accounting treatment in the Scheme conforms to the accounting standards prescribed under section 133 of the Companies Act, 2013. The exchange ratio of shares was determined to be fair and reasonable based on a report by M/s. BDS & Co. The Tribunal dispensed with the meetings of equity shareholders and creditors as all had given their consent to the Scheme.

3. Objections and Observations by the RD and Official Liquidator:
The Official Liquidator reported that the affairs of the Transferor Companies were not conducted prejudicially to the interest of members or public interest. The RD raised several points, including the issue of cash payment for fractional entitlements, the relevance of the appointed date, and compliance with section 232(3)(i). The Petitioners responded by amending the Scheme to address these concerns and affirmed compliance with the relevant provisions.

4. Payment of Applicable Stamp Duty:
The RD advised that the Transferee Company should pay applicable stamp duty on the transfer of immovable properties. The Petitioners agreed to comply with this requirement.

5. Issuance and Allotment of Shares and Handling of Fractional Entitlements:
The Scheme initially provided for cash payment for fractional entitlements, which was deemed equivalent to a buy-back of shares. The Petitioners amended the Scheme to address this issue, ensuring compliance with section 68 of the Companies Act, 2013. The amended Scheme specified the issuance of shares on a proportionate basis and the handling of fractional entitlements.

6. Effective Date and Procedural Compliance:
The appointed date for the Scheme was April 1, 2018. Despite concerns about the relevance of this date, the Petitioners provided consents from all shareholders and explained the timeline of approvals and filings. The Tribunal sanctioned the Scheme with the appointed date fixed as April 1, 2018. The Petitioners were directed to file the Schedule of Assets and liabilities within three weeks and deliver a certified copy of the order to the Registrar of Companies within thirty days.

Conclusion:
The Tribunal allowed the petition, sanctioning the Scheme of Amalgamation with the appointed date as April 1, 2018. The Scheme was deemed binding on all shareholders, creditors, and concerned parties. The Transferee Company was directed to issue and allot shares as per the amended Scheme and ensure compliance with all statutory requirements. The Transferor Companies were to be dissolved without winding up upon the Scheme becoming effective. The petitioners were granted leave to file necessary documents and comply with procedural formalities.

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