2012 (12) TMI 311 - HC - Companies Law

Company demerger sanctioned under Companies Act with approved share exchange ratio for Estate Division transfer

The Court granted sanction to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956 for the demerger of the Estate Division of a ... Scheme of Arrangement of Demerger of Estate Division of BHASKAR REFRACTORIES AND SW PIPES PRIVATE LIMITED (Demerged Company); into B N B S CEMENTS AND PRODUCTS PRIVATE LIMITED (Resultant Company) - held that:- Resultant Company (being wholly owned subsidiary of the De-merged Company) and Demerged Co. both are controlled by the members of the same family - In view of approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement - Petitioner Companies will comply with the statutory requirements in accordance with law - Certified copy of the order be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In terms of the provisions of sections 391 and 394 of the Companies Act, 1956, and in terms of the Scheme, the whole of the assets, rights and powers of the Estate Division of Demerged Company be transferred to and vest in the Resultant Company without any further act or deed - this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law; or permission/compliance with any other requirement which may be specifically required under any law - Petitioner Companies would voluntarily deposit a sum of Rs. One lac in the Common Pool fund of the Official Liquidator within three weeks from today. The statement is accepted - Petition is allowed. Issues:1. Sanction of Scheme of Arrangement under sections 391(2) & 394 of the Companies Act, 1956 for the demerger of Estate Division of a company into another.2. Share exchange ratio determination.3. Compliance with statutory requirements and objections, if any.4. Transfer of assets, liabilities, rights, and powers as per the approved Scheme of Arrangement.Analysis:Issue 1: Sanction of Scheme of ArrangementThe petition was filed under sections 391(2) & 394 of the Companies Act, 1956 by the Demerged Company and Resultant Company seeking sanction of the Scheme of Arrangement for the demerger of the Estate Division. The registered offices of both companies were in New Delhi. Details regarding their capital, incorporation dates, and resolutions approving the Scheme were provided. No pending proceedings under Sections 235 to 251 of the Companies Act, 1956 were reported. The Court had earlier dispensed with the requirement of convening meetings of shareholders, secured creditors, and unsecured creditors. The Scheme involved a share exchange ratio of 790 equity shares for every 100 held. The Court granted sanction to the Scheme under sections 391 and 394 of the Companies Act, 1956.Issue 2: Share Exchange RatioThe Scheme specified a share exchange ratio of 790 equity shares of Rs. 100 each for every 100 equity shares held, reflecting the proportionate capital employed in the Estate Division of the Demerged Company. This ratio was approved as part of the Scheme of Arrangement.Issue 3: Compliance and ObjectionsThe Regional Director raised concerns about the absence of details regarding individual assets and liabilities in the Scheme. In response, the Petitioner Companies clarified that the Scheme involved a Holding Company and a Subsidiary Company, both controlled by the same family, and that the Scheme was approved by shareholders and creditors. The balance sheet of the Demerged Company was approved and filed with the Court. The Regional Director's queries were addressed, and no objections were received from any party regarding the Scheme.Issue 4: Transfer of Assets and LiabilitiesThe Court directed the transfer of assets, rights, powers, liabilities, and duties of the Estate Division of the Demerged Company to the Resultant Company without further action. The order did not exempt the companies from stamp duty, taxes, or other charges as per the law. The Petitioner Companies agreed to deposit a sum in the Common Pool fund of the Official Liquidator within a specified time frame.In conclusion, the Court granted sanction to the Scheme of Arrangement, emphasizing compliance with statutory requirements and the transfer of assets and liabilities as per the approved Scheme.