9911796707
TMI Blog2016 (7) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... e first prayer in the three petitions is identical. Insofar as company petition No.191/2016 and 120/2016 are concerned, since these are the petitions filed by the transferor companies, quite obviously, they have made prayers with regard to the aspect pertaining to their delayed dissolution, albeit, without winding up as provided in clause (15) of the Scheme. Since, the prayers made are somewhat typical, therefore, for the sake of convenience, they are extracted hereafter: "Company Petition Nos.119/2016 and 120/2016 a) That Scheme of Amalgamation of Equitas Micro Finance Limited and Equitas Housing Finance Limited with Equitas Finance Limited, enclosed as Annexure 5 hereto, be sanctioned by the Hon'ble Court with effect from the Appointed Date (as defined under clause 1.2 of the Scheme of Amalgamation) so as to be binding on all the shareholders and creditors of the Petitioner Company namely, Equitas Micro Finance Limited and the said Petitioner Company; b) The Petitioner Company be dissolved without the process of winding up in the manner provided under clause 15 of the Scheme of Amalgamation (i.e.) the Petitioner Company shall be dissolved on the thirtieth day from the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the RBI as a Non-Banking Financial Company Micro Finance Institution (NBFC-MFI). It is further averred that transferor company No.1 is a systemically important Non-Deposit taking NBFC. 4. Similarly, transferor company no.2 is, apparently, also engaged in the business of providing finance, inter alia, for the purposes of housing and, construction of residential and commercial complexes involving societies, companies, bodies, office, association of persons etc. It is averred that transferor company no.2, in this behalf, has been issued a certificate of registration by the National Housing Bank, exemplifying the fact that it is a Non-deposit accepting Housing Finance Company. 5. In so far as the transferee company is concerned, it is also in the business of providing finance, albeit, for purchase of vehicles including cars, commercial vehicles. In addition, the transferee company also provides funds for purchase of capital equipment, accessories, land and building and plant and machinery etc. It is averred that the transferee company has been classified by the RBI as an NBFC Asset Finance Company-Non Deposit Taking (NBFC-AFC) (NBFC-NDSI) . 6. To be noted, while transferor c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice being issued in the captioned petitions, the RD, Ministry of Corporate Affairs, Chennai, on behalf of the Central Government has filed his affidavit. The affidavit filed is dated 26.04.2016. A perusal of the affidavit would show that while the RD projects that the petitioner companies are regular in filing their statutory returns and that no prosecution or complaints and/or investigation are pending against them, he has raised certain concerns, which are articulated in paragraph 8 to 11 of his affidavit. 7.1. The first concern of the RD, is that, the scheme does not fix the appointed date , and that, its definition under clause 1.2 of the scheme is tied-in with the definition of the effective date . In this context, the RD avers that the effective date as defined in clause 1.7 provides that it would be the working day immediately preceding the date of commencement of business of bank by the proposed SFB. The RD raises a concern that there is no clear date fixed in the scheme, which would work as the effective date. 7.2. The second concern expressed by the RD is also linked with the effective date, in as much as, while the scheme immediately does not articulate as to what wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RBI has given an in-principle approval for commencing SFB business based on an assurance that amalgamation/merger of transferor company No.1 and 2 with the transferee company, will take place prior to the matter being taken up for grant of a banking license. This requirement is complicated by the fact that the in-principle approval, which, as granted by the RBI, on 07.10.2015, has a validity period of eighteen (18) months and, therefore, would ordinarily exhaust itself on 07.04.2017. 9.3. Furtheremore, the manner in which the in-principle approval is framed, there is no guarantee that a banking licence would follow if, for any reason, the RBI, comes to the conclusion that all formalities and conditions stipulated by it, do not, stand fulfilled. 9.4. Quite clearly, in these circumstances, the scheme can neither provide a clear appointed date nor can it fix the share exchange ratio. What adds a further twist to the situation is that the scheme by itself cannot provide for dissolution of the transferor company No.1 and 2, albeit, without winding up (as is usually the case in such like schemes), perhaps, for the same reason, which is, that there is a possibility, (howsoever, unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection with, a scheme for the amalgamation of a company, which is being wound up, with any other company or companies, shall be sanctioned by the [Tribunal] unless the Court has received a report from [***]the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest: Provided further that no order for the dissolution of any transferor company under clause (iv) shall be made by the [Tribunal] unless the Official Liquidator has, on scrutiny of the books and papers of the company, made a report to the [Tribunal] that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest.] 9.6. A perusal of the aforementioned provisions would show that the court either, while sanctioning the compromise or arrangement or, by a subsequent order is entitled to make provisions for all or any of the matters, including allotment of shares by the transferee company, dissolution without winding of the transferor company and such incidental and consequential matters, as may be necessary to secure that amalgamation is fully and effectively carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is accepted, which I have, then the other concern of the RD with regard to the share-exchange ratio will also have to be dealt with in the same manner. Quite correctly and logically, the determination of the share-exchange ratio can only be worked out based on the methodology articulated therein i.e. book value method, albeit, on the effective date. Since, the effective date is discernable, which is a date linked to the date of commencement of business by SFB, the determination of the share-exchange ratio on that date, in my opinion, should not present any difficulty. 13. I must note that it has not been shown on behalf of the RD that there is any impediment in law in accepting the tenability of provisions incorporated, in the scheme, which relate to, as indicated above, the "appointed date", the "effective date" and the share exchange ratio. 14. This brings me to the other aspect, which is, whether the dissolution without winding of transferor company No.1 and 2 in terms of clause 15.1 of the scheme can be deferred to the 30th day from the "effective date" or, in the alternative, leave be granted to the transferor company No.1 and 2 to file a separate application for the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
