2015 (8) TMI 1406 - HC - Companies Law

Delhi High Court Dispenses Meetings for Companies Act Scheme Approval

In Re: Petro IT Limited AND Petro IT Solutions Private Limited

The Delhi High Court granted the application under Sections 391 to 394 of the Companies Act, 1956, dispensing with the need for meetings of equity ... Scheme of demerger - necessary approvals and consent - Held that:- The Board of Directors of the demerged and resulting companies in their separate meetings held on 29th March, 2014 have unanimously approved the proposed Scheme of Arrangement. Copies of the Resolutions passed at the meetings of the Board of Directors of the demerged and resulting companies have been placed on record. The demerged company has 10 equity shareholders, 01 secured creditor and 20 unsecured creditors. All the equity shareholders, the sole secured creditor, and 14 out of 20 unsecured creditors, being 70% in number and 99.98% in value, have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders, secured and unsecured creditors of the demerged company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. The resulting company has 02 equity shareholders and 03 unsecured creditors. Both the equity shareholders and all the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the resulting company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the resulting company, as on 31st January, 2014. Issues:Application under Sections 391 to 394 of the Companies Act, 1956 seeking dispensation of meetings for approval of Scheme of Arrangement between two companies.Analysis:The joint application was filed under Sections 391 to 394 of the Companies Act, 1956 seeking directions to dispense with the requirement of convening meetings of equity shareholders, secured, and unsecured creditors for the proposed Scheme of Arrangement between two companies. The demerged company, originally incorporated in 2004, and the resulting company, incorporated in 2013, both situated in New Delhi, fall under the jurisdiction of the Delhi High Court. The Scheme aims to merge the Software Solution Business of the demerged company into the resulting company to enhance operational focus and unlock value. The share exchange ratio under the Scheme involves the resulting company issuing 1.5 equity shares for every 09 equity shares held in the demerged company.The Board of Directors of both companies unanimously approved the Scheme, and consents/no objections from shareholders and creditors were obtained. The demerged company has 10 equity shareholders, 01 secured creditor, and 20 unsecured creditors, with the majority providing consents to the Scheme. Similarly, the resulting company has 02 equity shareholders and 03 unsecured creditors, all of whom have consented to the Scheme. As all necessary consents were obtained, the Court dispensed with the requirement of convening meetings for approval and allowed the application in the stated terms.