Court Sanctions Amended Scheme of Arrangement for Companies' Merger, Demerger, and Capital Reduction

The court granted sanction to the Amended Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956, between three companies based in New Delhi for amalgamation, demerger, and share capital reduction. With approvals, no objections, and compliance assurances, the court directed compliance within 30 days, emphasizing no exemption from stamp duty. Effective from April 1, 2014, the transferor company would dissolve without winding up, and the demerged undertaking would merge with the resulting company. The petition was allowed.

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Issues:
1. Sanction of Scheme of Arrangement under Sections 391 to 394 read with Section 100 of the Companies Act, 1956.

Analysis:
The joint petition filed sought approval for the Scheme of Arrangement between three companies - transferor, transferee, and resulting company, all based in New Delhi. The transferor company was incorporated in 2007, the transferee in 2007, and the resulting company in 2014. The Scheme aimed at amalgamation, demerger of a plot, and reduction of share capital post-merger. The companies claimed benefits like cost reduction, better resource utilization, and improved productivity from the Scheme.

The share exchange ratio specified in the Scheme allotted equity shares to shareholders of the transferor and transferee companies based on a defined ratio. The Board of Directors of all companies approved the Scheme. The court earlier dispensed with the requirement of convening meetings of equity shareholders and creditors. Post notices and reports, including from the Official Liquidator and Regional Director, no objections were raised. Compliance with Income Tax Act and FEMA requirements was assured by the petitioners. No objections were received from any party to the Scheme.

Considering the approvals received, lack of objections, and compliance assurances, the court granted sanction to the Amended Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956. The companies were directed to comply with statutory requirements within 30 days. The order clarified that it did not exempt from stamp duty payment. Upon sanction becoming effective from April 1, 2014, the transferor company would dissolve without winding up, and the demerged undertaking would merge with the resulting company. The petition was allowed accordingly.

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