2022 (11) TMI 508 - Tri - Companies Law

Composite scheme of merger - Seeking for dispensation of the meeting of shareholders and creditors of both the applicant companies - Section 230-232 of the Companies Act, 2013 - HELD THAT - There is no secured creditor in the applicant transferor company as per the CA certificate and the only creditor of the applicant transferee company is the holding company of the applicant transferee company. Further, consent affidavits from shareholders of both the applicant companies are received and the same is placed on record. As a result, no meetings of secured/unsecured creditors of both the applicant companies is required to be convened. Further, the meetings of the shareholders of both the applicant companies are dispensed with considering the consent affidavit furnished by the applicant companies. Application allowed.

Summary

Issues:
Application under Section 230-232 of the Companies Act, 2013 for dispensation of meetings of shareholders and creditors for a merger scheme.

Analysis:
The joint application filed by two companies, a transferor and a transferee company, under Sections 230-232 of the Companies Act, 2013, sought dispensation of meetings of shareholders and creditors for a proposed merger scheme. The transferor company, a public limited company, and the transferee company, a private limited company, both based in Madhya Pradesh, aimed to merge to enhance business operations. The transferor company was engaged in various business activities, while the transferee company focused on the manufacturing and trading of lights and components. The scheme of merger was prepared following a resolution by the respective Boards of Directors and was found to be in compliance with accounting standards. No investigations or proceedings were pending against the companies under relevant sections of the Companies Act. The proposed merger did not fall under the purview of any specific sectoral regulator.

The audit report revealed the details of shareholders and creditors, with the transferor company having 7 shareholders and no creditors, and the transferee company having 2 shareholders and a loan from its holding company. The Learned PCA contended that meetings of shareholders and creditors could be dispensed with as consents were obtained in writing. The Tribunal noted the absence of secured creditors, and with shareholders' consents on record, ruled that no meetings of creditors were necessary. The companies were directed to send notices to relevant authorities in compliance with the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016, allowing a 30-day period for objections. The application was allowed, granting approval for the scheme of merger under CA (CAA) No. 12 of 2021.