9911796707
TMI Blog2006 (3) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. (hereinafter referred as the "transferee company"). The registered office of the transferor company is located at Basantgarh, District Sirohi, Rajasthan, and an appropriate petition has been filed in the High Court of Judicature of Rajasthan at Jodhpur. The registered office of the transferee company is located at link House, 3, Bahadur Shah Zafar Marg, New Delhi, and is within the territorial jurisdiction of this court. The transferee company has placed on record a scheme of amalgamation, the salient features of the said scheme and the circumstances necessitating the scheme have been explained in the petition. The transferee company was incorporated on January 25, 1975. Its present authorised share capital is Rs. 15,00,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each. It is stated in the present petition that the transferor company has informed the transferee company vide its letter dated January 23, 2006, that the court convened meetings of the secured creditors, unsecured creditors and equity shareholders of the transferor company, amendments and modifications to the scheme of reconstruction, arrangement and demerger have been approved unanimously. It is also averred in the petition that the board of directors of the transferee company in their meeting held on January 23, 2006, have accepted the modifications in the scheme as approved by the secured creditors, unsecured creditors and the equity shareholders of the transferor company held on January 17, 2006. It is further stated in the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not sufficient to allot new shares to the members of the transferor company and, therefore, the transferee company should be directed to increase its authorised share capital after following the procedure prescribed under the Act. 2. In view of the demerger scheme, the subsidiary companies of the transferor company shall become subsidiaries of the transferee company. The said subsidiary companies personally hold equity shares in the transferee company and in terms of the scheme would be entitled to allotment of further equity shares. This it is submitted will amount to violation of section 42 of the Act, which provides that a body corporate cannot be a member of a company that is a holding company and any allotment or transfer of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany (C.P. No. 62 of 2004, decided on July 7, 2007)." There is no merit in the second contention also. Section 42 of the Act provides that a subsidiary company cannot hold shares or be a member of its holding company. Section 42(3) provides an exception to the general rule and permits a subsidiary company to continue as member of the holding company. Existing shareholding of the subsidiary company in the holding company will be protected under section 42(3) of the Act but the subsidiary companies will not have any voting rights. With regard to existing shares and future allotment of shares, the scheme of reconstruction, arrangement and demerger in paragraph 4.3.5 of part 4 provides that the shares held by the subsidiary companies in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholders of the transferor company. It was, therefore, put to the learned counsel for the petitioner whether fresh consent/no objection certificates or meeting of shareholders and creditors of the transferee company was required in view of the amendment/modification to the aforesaid scheme. Learned counsel for the petitioner has drawn my attention to the no objection/consent certificates filed in C.A. No. 173 of 2005. In the consent/ no objection certificates, the shareholders have given their consent to any amendment or modification to the scheme of reconstruction, arrangement and demerger between the transferor company and the transferee company. Reference is also drawn to the scheme itself and in particular to paragraph 5.5 by which ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
