2015 (5) TMI 158 - HC - Companies Law

High Court approves dispensation of shareholder meetings for Amalgamation Scheme under Companies Act

The High Court granted the application under Sections 391 and 394 of the Companies Act, 1956, allowing the dispensation of shareholder and creditor ... Application under Sections 391 and 394 of the Companies Act, 1956 read with Rules 6 & 9 of the Companies (Court) Rules, 1959 - Dispensation of convening the meetings of equity shareholders, secured and unsecured creditors - Held that:- The transferor company no. 1 has 32 equity shareholders. 06 out of 32 equity shareholders, being 18.75% in number and 98.35% in value, have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meeting of the equity shareholders of the transferor company no. 1 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured or unsecured creditor of the transferor company no. 1, as on 31.01.2015. The transferor company no. 2 has 02 equity shareholders and 01 unsecured creditor. Both the equity shareholders and the only unsecured creditor have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company no. 2 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferor company no. 2, as on 31.01.2015. The transferor company no. 3 has 03 equity shareholders and 02 unsecured creditors. All the equity shareholders have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. As per the certificate dated 18th February, 2015 issued by V. K. Arora & Associates, Chartered Accountants, out of 02 unsecured creditors, 01 unsecured creditor namely Menichetti Glues & Adhesives having an unsecured debt of ₹ 32,578/- has been paid in full on 18.02.2015. The consent of other unsecured creditor has been placed on record. All the consents have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company no. 3 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferor company no. 3, as on 31.01.2015. The transferee company has 05 equity shareholders and 02 unsecured creditors. All the equity shareholders and both the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the transferee company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferee company, as on 31.01.2015. - The application approved. Issues:Application under Sections 391 and 394 of the Companies Act, 1956 for directions to dispense with shareholder and creditor meetings regarding a proposed Scheme of Amalgamation.Analysis:The application sought directions under Sections 391 and 394 of the Companies Act, 1956, along with Rules 6 & 9 of the Companies (Court) Rules, 1959, to dispense with the requirement of convening meetings of equity shareholders and creditors for the proposed Scheme of Amalgamation. The scheme involved the amalgamation of three transferor companies with a transferee company. The registered offices of all companies were within the jurisdiction of the Delhi High Court.The history and details of each company were provided in the judgment, including their original incorporation under the Companies Act, 1913 or 1956, subsequent name changes, authorized and issued share capital, and current status. The application included copies of Memorandum and Articles of Association, audited balance sheets, and the Scheme of Amalgamation with its benefits such as reducing overheads, improving operational efficiency, and streamlining regulatory compliances.Regarding the share exchange ratio, the Scheme specified the allotment of equity shares to shareholders of transferor companies upon the scheme's effectiveness. It was highlighted that one transferor company was a wholly-owned subsidiary of the transferee company, leading to the cancellation of its shares. Similarly, the other transferor company's shares were already held by the transferee company and its subsidiaries, eliminating the need for new share issuances.The judgment detailed the consents received from equity shareholders and creditors of all companies involved, indicating their approval of the proposed Scheme of Amalgamation. The Board of Directors of each company had also unanimously approved the scheme in separate meetings. Notably, no pending proceedings under relevant sections of the Companies Act, 1956 were reported against the applicant companies.Ultimately, the High Court allowed the application, dispensing with the requirement for shareholder and creditor meetings for all companies involved in the proposed Scheme of Amalgamation, as all necessary consents were obtained, and the Board of Directors had approved the scheme.