Amalgamation scheme sanctioned after shareholder approval, creditor consent, and resolution of Registrar objections in company restructuring

A proposed amalgamation scheme under the Companies Act, 1956 was sanctioned after shareholder approval in meetings convened under court directions, no-objection affidavits from the transferor-company's creditors and the transferee-company's lending institutions, and resolution of objections raised by the Registrar of Companies. The supporting affidavits showed that the authorised share capital had been increased, the transferor's holding in the transferee-company was liable to cancellation under the scheme, and the balance-sheet investment represented equity shares rather than debentures. The Official Liquidator reported that the companies' affairs had not been conducted prejudicially to public interest, and no objections were received after publication, so the scheme was approved.

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Issues: Whether the proposed scheme of amalgamation between the transferor-company and the transferee-company should be sanctioned under the Companies Act, 1956.

Analysis: The shareholders of both companies approved the scheme in the meetings convened under the Court's directions. The creditors of the transferor-company and the lending institutions of the transferee-company filed affidavits expressing no objection. The objections raised on behalf of the Registrar of Companies were met by affidavits showing that the authorised share capital had been increased, the transferor's holding in the transferee-company was liable to be cancelled under the scheme, and the investment described in the balance sheet was in equity shares and not debentures. The Official Liquidator reported that the affairs of the companies had not been conducted in a manner prejudicial to public interest, and no objections were received after publication.

Conclusion: The scheme of amalgamation was sanctioned.

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