Approval of Scheme of Arrangement for De-merger under Companies Act The court granted the joint application under sections 391 & 394 of the Companies Act, 1956 for a Scheme of Arrangement for the de-merger of a ...
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Approval of Scheme of Arrangement for De-merger under Companies Act
The court granted the joint application under sections 391 & 394 of the Companies Act, 1956 for a Scheme of Arrangement for the de-merger of a Strategic Business Division. The proposed scheme, approved by the Board of Directors of both companies, was supported by shareholders and creditors, leading to dispensation of the requirement for meetings of shareholders and creditors. With consents obtained and no pending proceedings against the companies, the court allowed the application as requested, issuing an Order for Dasti.
Issues: Application under sections 391 & 394 of the Companies Act, 1956 for Scheme of Arrangement for de-merger of Strategic Business Division.
Analysis: The judgment pertains to a first motion joint Application under sections 391 & 394 of the Companies Act, 1956, concerning the Scheme of Arrangement for de-merger of the Strategic Business Division of a company into another. The Application includes a copy of the proposed Scheme of Arrangement and details regarding the incorporation dates and capital of the involved companies. It is noted that the registered offices of both the Demerged Company and the Resultant Company are within the jurisdiction of the Delhi High Court.
The Application also provides information on the Memorandum and Articles of Association, as well as the latest audited Annual Accounts for both companies. The Board of Directors of both companies has approved the proposed Scheme, and copies of the Board Resolutions have been submitted with the Application. Additionally, it is highlighted that no proceedings under sections 235 to 251 of the Companies Act, 1956 are pending against any of the Applicant Companies at the time of the Application.
The Application includes a detailed chart showing the status of Shareholders, Secured and Un-secured Creditors of both the Demerged and Resultant Companies, along with consents obtained from them for the proposed Scheme. Based on the consents received, a prayer is made for dispensation of the requirement of convening meetings of Shareholders and Creditors of both companies, which is granted by the Court.
Furthermore, it is mentioned that the Un-secured Creditors of the Resultant Company have given their consents to the proposed Scheme, eliminating the need for a meeting of Un-secured Creditors. As the Demerged Company has no Secured/Un-secured Creditors and the Resultant Company has no secured creditor, there is no necessity to convene meetings of the respective Creditors. Consequently, the Application is allowed in the stated terms, with an Order for Dasti.
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