Court Orders Equity Shareholders Meeting for Scheme of Arrangement

The Court ordered the convening of a meeting of equity shareholders to consider a proposed scheme of arrangement involving amalgamation and de-merger. It dispensed with the need for meetings of creditors, except for secured creditors' approval as per loan agreements. Compliance with SEBI regulations was confirmed, and the Court provided directions for convening and conducting the equity shareholders' meeting. The application was disposed of after addressing all issues, ensuring compliance with legal requirements and regulations governing the proposed scheme.

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Issues:
1. Directions for convening the meeting of equity shareholders
2. Dispensation of the meetings of the creditors
3. Approval of the scheme by secured creditors
4. Compliance with SEBI regulations
5. Convening and conducting the equity shareholders' meeting

1. Directions for convening the meeting of equity shareholders:
The applicant sought directions for convening a meeting of equity shareholders to consider a proposed scheme of arrangement involving amalgamation and de-merger. The advocate for the applicant made submissions in this regard. The Court ordered the meeting to be held, specifying the date, time, and venue. Notices were to be sent to shareholders with relevant documents, and public notices were to be published. The Chief Executive Officer or the Chief Financial Officer of the applicant-company was designated as the Chairman of the meeting.

2. Dispensation of the meetings of the creditors:
The Court considered the submission that the proposed scheme did not compromise the rights of secured or unsecured creditors. It was noted that the net worth of the transferee-company would not be severely affected post-scheme. Consequently, the Court held that meetings of secured/unsecured creditors were not necessary and dispensed with the requirement for their approval.

3. Approval of the scheme by secured creditors:
Although the Court dispensed with the need for meetings of creditors, it was clarified that approval from secured creditors was still required as per the terms of loan agreements. The applicant had approached secured creditors for their approval, which was to be obtained and submitted before final scheme sanction by the Court.

4. Compliance with SEBI regulations:
Being a listed public limited company, the applicant had obtained prior approval from SEBI through relevant stock exchanges. Compliance with SEBI circulars regarding postal ballot and e-voting by public shareholders was deemed unnecessary. The applicant had submitted the required undertaking and auditor's certificate to SEBI, and the Court found no need to issue further directions in this regard.

5. Convening and conducting the equity shareholders' meeting:
The Court ordered the convening of the equity shareholders' meeting, specifying various procedural aspects such as quorum, proxy voting, and reporting requirements. The Chairman of the meeting was granted powers under the Articles of Association and the Companies (Court) Rules, including the conduct of polls to ascertain decisions. The value of each shareholder's vote was to be determined by the Chairman, with a requirement to report the meeting's results to the Court within a specified timeframe.

In conclusion, the Court disposed of the application after addressing all issues related to convening and obtaining approvals for the proposed scheme of arrangement, ensuring compliance with legal requirements and regulations governing such transactions.

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