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TMI Blog2000 (7) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... , which meeting was convened and held pursuant to the directions of this Court. That meeting was attended by 66 of 3,000 shareholders of the transferee-company and the resolution approving the scheme was passed unanimously. The members who attended the meeting held 46.21 per cent of the share capital of the company. 2. Notice of this petition was duly advertised and notice also served on the Central Government. No one has come forward to oppose the scheme in response to the publication of the notice in the newspapers. The Central Government, through its Regional Director, Department of Company Affairs, has brought to the notice of the Court the fact that the exchange ratio of 159 shares of the transferee-company for every single share o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative yield, the expected revenue generation through targeted markets, assuming normal tax liability at the marginal rate, and after determining the contingent liabilities based on the discussion with the managements of the two companies, and to the values so arrived at, weightage has been given on the basis of the break-up or net asset value method, the yield or earning capacity method, the market quotations method and the discounted cash flow method to the extent applicable. 6. The valuation approach has been described by the valuers, thus : "In net based companies such as EBS it should be remembered that there is no time-tested metrics for evaluating such companies. Valuers are constantly trying to find real tools and real metrics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of valuation. We have further compared the value so arrived with the valuation scenario resulting out of discounting free cash flows, and have considered that in the case of Net based companies, both these values become equally relevant. Having regard to the fact that the transferor-company has created a multi-market platform using a universal auction engine for use in the internet trading on-line, the size of the capital market, the extent of the business that is likely to be carried on through the net, and the market share that the merged company can expect to acquire, as also the profits it is expected to realise, the assumption made is that on a conservative basis the present average daily transaction values (NSE + BSE) is Rs. 10,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved : "So many imponderables enter the exercise of valuation of shares. It must at once be stated that valuation of shares is a technical and complex problem which can be appropriately left to the consideration of experts in the field of accountancy." 9. The valuation that has been proposed in the scheme is the value which is based upon an exercise carried out by persons having knowledge of the relevant methods of valuation, being professional chartered accoun- tants. The methods adopted by them for arriving at the values have been set out in the report, relevant parts of which have already been extrac- ted above. It is evident therefrom that the valuation arrived at was after due care and consideration, taking note of the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The point raised by the Regional Director regarding the apparent generosity in the matter of allotment of shares to the shareholders of the transferor-company, is therefore, in no way a vitiating circumstance, which would come in the way of sanction being accorded to the scheme. Moreover, the matters relating to the terms on which the two companies are to amalgamate are largely for the shareholders of the two companies to decide, so long as they make a full and true disclosure of all relevant facts to the Court and comply with every requirement of the law. Though the transferee-company has 3,000 shareholders, despite the notice of the meeting, specially convened after obtaining directions from the Court for considering the scheme, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles of association of the company have also been suitably amended pursuant to the resolutions passed at the extraordinary general meeting of the shareholders held on that date. The necessary forms and also the fee for the increase of the share capital, as it is submitted by the learned counsel at the bar have been paid to the Registrar. Therefore, the acts require to be performed by the transferee-company in terms of paragraph 10.1 of the scheme have already been performed. 14. There is no objectionable feature in the scheme. The scheme of amalgamation is sanctioned. 15. As the transferor-company is in the State of Maharashtra, it is not necessary to give any direction as regards the dissolution of that company. Order accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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