Dispensation of Meetings in Company Scheme of Arrangement under Companies Act. The application under Sections 391(1) and 394 of the Companies Act, 1956 was granted, dispensing with the need for meetings of equity shareholders and ...
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Dispensation of Meetings in Company Scheme of Arrangement under Companies Act.
The application under Sections 391(1) and 394 of the Companies Act, 1956 was granted, dispensing with the need for meetings of equity shareholders and unsecured creditors and directing meetings of secured creditors to consider and approve a proposed Scheme of Arrangement. The demerger aimed to merge Investment Businesses of the companies to simplify structures. Share exchange ratios were outlined, and consents were obtained, leading to dispensation of certain meetings based on consent levels. Directions were given for conducting secured creditors' meetings, waiving the need for newspaper notices, and specifying quorum and proxy requirements. Chairpersons were appointed, entitled to fees borne by the applicants. The application was allowed under the specified terms.
Issues: Application under Sections 391(1) and 394 read with Sections 100 to 104 of the Companies Act, 1956 for dispensing with the requirement of convening meetings of equity shareholders, unsecured creditors, and secured creditors to approve a Scheme of Arrangement.
Analysis: The joint application sought directions to dispense with the need for meetings of equity shareholders and unsecured creditors of the applicant companies, while convening meetings of secured creditors to consider and approve a proposed Scheme of Arrangement. The registered offices of the involved companies are in New Delhi. The history and details of incorporation changes for the transferor company no. 1, transferor company no. 2, and the transferee company were provided, along with their current share capital structures. Memorandum and Articles of Association, audited balance sheets, and the Scheme of Arrangement were submitted for review.
The proposed demerger aims to merge Investment Businesses of the transferor companies into the transferee company and vice versa to simplify corporate structures and enhance resource management. Share exchange ratios were outlined in the Scheme for shareholders of the involved companies. The Board of Directors of all companies unanimously approved the Scheme. Consents from equity shareholders and creditors were obtained and recorded, leading to dispensation of certain meetings based on the level of consent received.
Meetings of secured creditors for both transferor and transferee companies were directed to seek approval for the Scheme of Arrangement. The need for publication of notices in newspapers was waived, opting for direct service to secured creditors. Quorum requirements and proxy considerations for the meetings were specified. Chairpersons were appointed for the meetings, with instructions to ensure fair conduct. Directions were given for sending notices and scheme details to secured creditors in advance.
Chairpersons were entitled to a fee and incidental expenses for conducting the meetings, with costs to be borne by the applicants. Reports from the Chairpersons were mandated within two weeks post-meetings. The application was allowed as per the outlined terms.
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