2015 (5) TMI 1133 - HC - Companies Law

Dispensation of Shareholders' Meeting for Amalgamation Scheme Approval

The High Court of PUNJAB & HARYANA approved the dispensation of the equity shareholders' meeting for a Scheme of Amalgamation due to their consents. ... Dispensation of shareholders' meeting - Dispensation of secured creditors' meeting - Meeting of unsecured creditors - Scheme of Amalgamation - Appointment of chairperson for creditors' meeting - Notice and publication requirements for creditors' meeting - Quorum and voting threshold for creditors' approvalDispensation of shareholders' meeting - Scheme of Amalgamation - Dispensation of the meeting of equity shareholders of the Transferee Company was granted. - HELD THAT: - The petitioner produced the memorandum, articles, board resolutions approving the Scheme of Amalgamation and consents from both equity shareholders. In view of the unanimous consents on record and the statutory scheme under Sections 391-394 of the Companies Act, 1956, the Court accepted the petitioner's prayer to dispense with convening a separate meeting of equity shareholders for sanctioning the Scheme of Amalgamation.Meeting of equity shareholders dispensed with.Dispensation of secured creditors' meeting - Scheme of Amalgamation - No meeting of secured creditors was required to be convened for the Transferee Company. - HELD THAT: - The petitioner filed a certificate stating that there are no secured creditors of the Transferee Company. On that basis the Court held that no meeting of secured creditors is necessary in the present proceedings under Sections 391-394.No meeting of secured creditors required.Meeting of unsecured creditors - Appointment of chairperson for creditors' meeting - The Court directed that a meeting of unsecured creditors falling in categories B and C be convened and fixed the date, venue, and appointed a Chairman and Co Chairman with specified fees and reporting obligations. - HELD THAT: - Although shareholders' meeting was dispensed with and there were no secured creditors, the petitioner had 2,219 unsecured creditors classified into categories A, B and C. The Court deemed it appropriate to summon only those unsecured creditors in categories B and C to consider and vote on the Scheme. The Court appointed named advocates as Chairman and Co Chairman for the meeting, fixed their fees, and required the Chairman to report the result to the Court by affidavit within seven days of the meeting's conclusion.Meeting of unsecured creditors in categories B and C ordered to be convened on the specified date and venue; Chairman and Co Chairman appointed with fees and directed to file a report.Notice and publication requirements for creditors' meeting - The manner and timeline for notice and publication of the creditors' meeting were prescribed by the Court. - HELD THAT: - The Court directed that notice of the meeting be given individually to unsecured creditors by post and that public notice be published in specified newspapers and the Official Gazette of the Government of Haryana. Publication was ordered in both English and Hindi editions for Delhi/NCR, and the notices/publications were to be made at least 21 days prior to the meeting date, with the meeting conducted strictly in accordance with law.Notice and publication of the creditors' meeting to be carried out as directed, at least 21 days before the meeting.Quorum and voting threshold for creditors' approval - The Court prescribed the approval threshold for the Scheme in the creditors' meeting: approval by at least 75% in value and by a majority in number of unsecured creditors present and voting. - HELD THAT: - For the meeting of unsecured creditors ordered to be convened, the Court directed that the Scheme be put to vote and that approval would require a dual threshold - a minimum of 75% in value and a majority in number of the unsecured creditors present and voting either in person or by proxy - thereby specifying the statutory standard to be applied at the meeting.Creditors' approval to be obtained by minimum 75% in value and majority in number of those present and voting.Final Conclusion: The petition under Sections 391-394 was partly granted: the meeting of equity shareholders was dispensed with and no secured creditors' meeting was required; a meeting of unsecured creditors in specified categories was ordered on a fixed date and venue with appointed chairpersons, prescribed fees, mandated notice and publication procedures to be completed at least 21 days prior, and the Scheme to be approved by the specified 75% (value) and majority (number) thresholds; the Chairman was directed to report the meeting's result to the Court by affidavit within seven days. Issues: Petition under Sections 391 to 394 of the Companies Act, 1956 seeking dispensation of meetings of equity shareholders and creditors for sanctioning a scheme of amalgamation.In this judgment, the High Court of PUNJAB & HARYANA considered a petition under Sections 391 to 394 of the Companies Act, 1956, where the Petitioner Company/Transferee Company sought dispensation of meetings of equity shareholders and creditors for sanctioning a Scheme of Amalgamation. The Transferor Company's registered office was in Chennai, while the Petitioner Company/Transferee Company's office was in Gurgaon, within the court's jurisdiction. Both companies' Memorandum and Articles of Association were annexed with the petition. The Board of Directors of both companies had approved the Scheme of Amalgamation in their respective meetings. The Petitioner Company had two equity shareholders who consented to the scheme. There were no secured creditors, but 2219 unsecured creditors, classified into categories A, B, and C based on the value of their claims.The court accepted the prayer for dispensation of the equity shareholders' meeting due to their consents. Since there were no secured creditors, no meeting was required for them. However, the court directed a meeting of the unsecured creditors falling under categories B & C to obtain their consents for the Scheme of Amalgamation. The meeting was scheduled to take place on a specified date, time, and venue. The court appointed a Chairman and Co-Chairman for the meeting, with specified fees for their services. The Chairman was required to report the meeting's results to the court within seven days, verified by affidavit. The meeting was to be conducted in accordance with the law, with proper notification to all concerned parties, including public notices in newspapers and the Official Gazette. The Scheme would be approved by a minimum of 75% in value and majority in number of the unsecured creditors present and voting, either in person or through proxy. The matter was adjourned to a later date for further proceedings.