Court approves demerger scheme after compliance with procedures and submissions. The court sanctioned the Scheme of Arrangement for the demerger of the CFS Division from one company into another, following compliance with required ...
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Court approves demerger scheme after compliance with procedures and submissions.
The court sanctioned the Scheme of Arrangement for the demerger of the CFS Division from one company into another, following compliance with required procedures and submissions. After addressing observations raised by the Regional Director, including financial statements and asset transfer details, the court found all requirements satisfied. Costs were quantified and directed to be paid by the Transferee Company to the Assistant Solicitor General, with liberty granted for direct payment.
Issues: Sanction of Scheme of Arrangement for demerger of CFS Division into another company.
Analysis: The petitions were filed seeking sanction of a Scheme of Arrangement for the demerger of CFS Division of one company into another. The court had directed meetings of shareholders and creditors to be held for consideration of the Scheme. Due to delays in filing Chairman Reports, extensions were granted for the same. The Chairman Reports were required to be filed in compliance with earlier court orders. Similar procedures were followed for both companies involved in the demerger.
The Company Petitions seeking sanction of the Scheme were subsequently filed. The court admitted the petitions and directed the issuance of notices to the Regional Director. Notice publication in newspapers was delayed, leading to further applications for fresh hearing dates, which were granted for final hearing. The petitioners published the notice in newspapers as required and filed supporting affidavits.
In response to the notice to the Regional Director, an affidavit was filed by the Deputy ROC along with a letter from the Regional Director. Two observations were made, one regarding the financial statement submission and the other regarding details of assets and liabilities transfer. The latest financial statement was submitted, and details of assets transfer were explained, satisfying the Regional Director and the court.
After hearing the advocates, the court found that both observations were satisfied, and accordingly, the Scheme of Arrangement was sanctioned. Costs were quantified and directed to be paid by the Transferee Company to the Assistant Solicitor General. The court granted liberty for the payment to be made directly by the Transferee Company.
In conclusion, the court approved the Scheme of Arrangement for the demerger, ensuring compliance with all necessary procedures and submissions, and directed the payment of costs as specified.
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