2015 (5) TMI 1132 - HC - Companies Law

Dispensation granted for creditor meetings; Equity Shareholders and Unsecured Creditors to convene.

The Court granted dispensation of meetings for certain categories of creditors while directing meetings for Equity Shareholders and Unsecured Creditors of ... Scheme of Amalgamation - dispensation of meetings - convening of meetings of equity shareholders and unsecured creditors - publication and service of notice of meetings - appointment and duties of Chairman/Co-Chairman for court-convened meetings - compliance with SEBI Circular clause 5.16 (postal ballot and e-voting) - approval thresholds for scheme: 75% in value and majority in number of those present and votingDispensation of meetings - Scheme of Amalgamation - Dispensation of convening, holding and conducting of meetings of the Transferor Company's equity shareholders, secured creditors and unsecured creditors and of the Transferee Company's secured creditors - HELD THAT: - On the material placed on record (board approvals, shareholder list and consent letters of all equity shareholders of the Transferor Company, consent of all secured and unsecured creditors of the Transferor Company, and consent of the Transferee Company's secured creditors), the Court found that the interests of those classes would not be prejudiced and that convening meetings for those classes was unnecessary. The Court therefore ordered dispensation of the meetings of the Transferor Company's equity shareholders, secured and unsecured creditors, and of the Transferee Company's secured creditors.Meetings of the Transferor Company's equity shareholders, secured creditors and unsecured creditors and of the Transferee Company's secured creditors are dispensed with.Convening of meetings of equity shareholders and unsecured creditors - publication and service of notice of meetings - Requirement to convene meetings of the Transferee Company's equity shareholders and unsecured creditors and the manner and schedule for the same - HELD THAT: - No consents were obtained from the Transferee Company's equity shareholders and unsecured creditors; accordingly the Court directed that meetings of those two classes be convened. The Court fixed the venue, dates and times for both meetings, required publication of notice in specified newspapers and the official Gazette of Haryana, mandated notice at least 21 days before the meetings, permitted a common notice for both meetings while also directing individual notices by ordinary post to concerned equity shareholders and unsecured creditors, and required that the meetings be conducted in accordance with law.Meetings of the Transferee Company's equity shareholders and unsecured creditors shall be held as scheduled, after notice published and served as directed.Appointment and duties of Chairman/Co-Chairman for court-convened meetings - Appointment of Chairmen and Co-Chairmen to convene and preside over the meetings and reporting obligation - HELD THAT: - The Court appointed specified advocates as Chairman and Co-Chairman for each meeting, fixed their fees, and required the Chairman/Co-Chairman to report the result of the meetings to the Court within seven days of conclusion, such report to be verified by affidavit. The appointments and reporting requirement ensure independent supervision of the meetings and timely communication of results to the Court.Named Chairmen and Co-Chairmen are appointed with fixed fees and must report results to the Court within seven days by affidavit.Compliance with SEBI Circular clause 5.16 (postal ballot and e-voting) - Permissibility of obtaining public shareholders' consent by postal ballot and e-voting in accordance with SEBI Circular clause 5.16 - HELD THAT: - The Transferee Company sought permission to comply with clause 5.16 of the SEBI Circulars (relating to issue of shares to promoter group pursuant to amalgamation) by obtaining consents of public shareholders through postal ballot and e-voting. The Court accepted this prayer and permitted the Transferee Company to follow the procedure set out in the SEBI Circulars for obtaining public shareholder consent.Permission granted to obtain public shareholders' consent by postal ballot and e-voting in accordance with clause 5.16 of the SEBI Circulars.Approval thresholds for scheme: 75% in value and majority in number of those present and voting - Specification of the voting thresholds required for approval of the Scheme at the meetings - HELD THAT: - The Court directed that the Scheme presented at the meetings of the Transferee Company's equity shareholders and unsecured creditors shall be approved by not less than 75% in value and by a majority in number of the equity shareholders and unsecured creditors present and voting, either in person or by proxy, thereby prescribing the quantitative and numerical thresholds for validating the scheme's approval at the convened meetings.Scheme to be approved at the meetings by minimum 75% in value and majority in number of those present and voting.Final Conclusion: The petition under Sections 391-394 was partly allowed: meetings of certain classes (Transferor Company's shareholders and creditors; Transferee Company's secured creditors) were dispensed with on the stated consents; meetings of the Transferee Company's equity shareholders and unsecured creditors were ordered to be convened on the specified schedule and in the prescribed manner, Chairmen/Co-Chairmen were appointed with reporting obligations, SEBI clause 5.16 compliance was permitted via postal ballot and e-voting, and the Scheme's approval thresholds at the meetings were specified. Issues:Petition under Sections 391 to 394 of the Companies Act, 1956 for dispensation of meetings of Equity Shareholders, Secured and Unsecured Creditors of Transferor and Transferee Companies for sanctioning the Scheme of Amalgamation.Analysis:The petition under Sections 391 to 394 of the Companies Act, 1956 seeks dispensation of meetings of Equity Shareholders, Secured and Unsecured Creditors of both the Transferor and Transferee Companies for the approval of the Scheme of Amalgamation. The Transferor and Transferee Companies, both situated in the State of Haryana, have detailed their main objects in their respective Memorandum and Articles of Association. The Board of Directors of both companies have approved the Scheme in meetings held on 5.2.2015, with necessary resolutions annexed. The Transferor Company has four Equity Shareholders, all of whom have consented to the Scheme, along with the Secured and Unsecured Creditors. The Transferee Company, on the other hand, has a significant number of Equity Shareholders, Secured and Unsecured Creditors, all of whom have given their consent to the Scheme.The petition highlights that the interest of Unsecured Creditors of the Transferee Company will not be adversely affected post-amalgamation, and they will be paid off during the normal course of business. It is emphasized that the Scheme is not a compromise/arrangement with the creditors, as all creditors will be paid in full as per their due amounts. The positive Net Asset Value of the Transferee Company post-amalgamation ensures the creditors' interests are adequately safeguarded. The petition further seeks dispensation of meetings for Unsecured Creditors with claims less than Rs. 1 lakh, while meetings for those with claims of Rs. 1 lakh and above are accepted.The NSE and BSC have given their consent to the Scheme of Amalgamation. The compliance with SEBI Circulars regarding shares issuance to the Promoter Group is also addressed, with the need for public shareholders' consent through postal ballot and e-voting. The Court orders dispensation of meetings for certain categories of creditors while directing meetings for Equity Shareholders and Unsecured Creditors of the Transferee Company to be held on specified dates and venues. Chairmen and Co-Chairmen are appointed for these meetings, with specific fees allocated. The meetings are to be conducted in accordance with the law, with due notice to all stakeholders, including public notifications in newspapers and the official Gazette of the Government of Haryana.The Scheme's approval in the Equity Shareholders and Unsecured Creditors meetings requires a minimum of 75% in value and a majority in number of those present and voting, either in person or through proxy. The permission to publish a common notice for both meetings is granted, along with individual notices sent to Equity Shareholders and Unsecured Creditors. Compliance with SEBI Circular provisions is accepted, ensuring transparency and adherence to regulatory requirements.