2011 (6) TMI 677 - HC - Companies Law

Madras High Court approves company amalgamation petitions under Companies Act, 1956

Lifesize Communications India (P.) Ltd., In re

The Madras High Court approved the company petitions for amalgamation filed by M/s. Lifesize Communications India (P.) Ltd. and M/s. Logitech Engineering ... Amalgamation Issues:Company amalgamation under sections 391 to 394 of the Companies Act, 1956; Objection by the Regional Director, Ministry of Corporate Affairs regarding the authorized share capital; Approval and adoption of the scheme of amalgamation by the board of directors of the transferor and transferee companies; No investigations pending against the transferor and transferee companies under relevant provisions of the Companies Act, 1956; Official liquidator's report on the affairs of the transferor company; Orders dispensing with the meeting of equity shareholders for both transferor and transferee companies.Analysis:The judgment by the Madras High Court pertains to two company petitions filed by M/s. Lifesize Communications India (P.) Ltd. and M/s. Logitech Engineering and Designs India (P.) Ltd. seeking the sanction of a scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956. The transferor company, Lifesize Communications India (P.) Ltd., was incorporated in 2006 and later shifted its registered office to Chennai. The board of directors of both companies approved the scheme to merge the transferor with the transferee company.The court had previously dispensed with the need for equity shareholders' meetings for both companies, allowing them to file petitions for the scheme's sanction. It was noted that there were no secured creditors for the transferor company, and no investigations were pending against either company under relevant sections of the Companies Act, 1956. The official liquidator's report found no prejudicial conduct in the affairs of the transferor company.An objection raised by the Regional Director, Ministry of Corporate Affairs, regarding the authorized share capital was discussed. The objection was related to the transfer of filing fees for the increased authorized capital from the transferor to the transferee company. The court referred to a previous judgment to reject the objection, emphasizing the intent of section 391 to facilitate company reconstitution without the need for multiple applications for alterations.Ultimately, the court approved the company petitions for amalgamation, stating that the scheme would benefit the equity shareholders of both the transferor and transferee companies. The judgment highlighted compliance with legal provisions, absence of prejudicial conduct, and the overall benefit to the stakeholders as reasons for the approval.