Approval of Amalgamation Scheme Under Companies Act: Shareholders Vote, Objections Dismissed

Maknam Investment Ltd., In re

Maknam Investment Ltd., In re - [1995] 6 SCL 93 (CAL) Issues Involved:
1. Sanction of the scheme of amalgamation u/s 391(2) and 394 of the Companies Act, 1956.
2. Validity of notices issued for the shareholders' meeting.
3. Objection regarding the supply of the list of members.
4. Presence and voting of directors at the meeting.
5. Shareholding pattern and voting rights.
6. Compliance with special resolutions passed at the annual general meeting.
7. Deletion of the word 'private' from the certificate of registration.
8. Increase in the share capital of the transferor companies.
9. Similarity of objects between transferor and transferee companies.
10. Financial status of transferor companies and commercial viability of the merger.
11. Fairness of the exchange ratio of shares.

Summary:

1. Sanction of the Scheme of Amalgamation:
The application was made u/s 391(2) and 394 of the Companies Act, 1956, for the sanction of the scheme of amalgamation of Maknam Investment Limited and Namtok Investments Limited with India Foils Limited (IFL). The Court noted that the majority of shareholders from all companies involved had voted overwhelmingly in favor of the scheme.

2. Validity of Notices Issued for the Shareholders' Meeting:
An objection was raised regarding the late receipt of the notice by a shareholder, Tamal Kumar Majumdar. The Court held that the late delivery was due to postal delays and did not invalidate the meeting as per section 172(3) of the Act.

3. Objection Regarding the Supply of the List of Members:
Majumdar's grievance about not being supplied a list of members was dismissed. The Court found that he did not comply with the requirements of section 163 of the Act, which necessitates prior payment for obtaining copies of the register of members.

4. Presence and Voting of Directors at the Meeting:
The objection that only four out of eleven directors were present at the meeting was dismissed. The Court emphasized that it was concerned with the total voting of shareholders rather than individual directors' voting patterns.

5. Shareholding Pattern and Voting Rights:
The objection regarding the shareholding pattern was dismissed. The Court stated that all shareholders stand on the same footing and have the right to vote on the scheme.

6. Compliance with Special Resolutions Passed at the Annual General Meeting:
The Court found no violation of special resolutions passed at the annual general meeting held on 23-8-1994, noting that the date of issue of rights shares was left to the discretion of the Board of Directors.

7. Deletion of the Word 'Private' from the Certificate of Registration:
The objection regarding the word 'private' not being removed from the certificate of registration was dismissed. The Court confirmed that the word had been deleted in accordance with the law.

8. Increase in the Share Capital of the Transferor Companies:
The Court dismissed the objection regarding the increase in the share capital of the transferor companies, stating it was irrelevant to the amalgamation process.

9. Similarity of Objects Between Transferor and Transferee Companies:
The Court found that the objects of the transferor and transferee companies were sufficiently similar, particularly in their investment activities, and that it was not necessary for all objects to be identical for the amalgamation.

10. Financial Status of Transferor Companies and Commercial Viability of the Merger:
The Court held that the commercial viability of the merger was a matter for the shareholders to decide, and there was no evidence that the proposed merger was manifestly unfair or intended to defraud shareholders.

11. Fairness of the Exchange Ratio of Shares:
The exchange ratio, fixed by Price Water House, was deemed fair and reasonable. The Court stated it would not interfere unless there was manifest unreasonableness or fraud, which was not evident in this case.

The Court concluded that the scheme of amalgamation was fair, reasonable, and made in good faith, and thus sanctioned the scheme as per the prayers of the petitioners.