2015 (8) TMI 334 - HC - Companies Law

Court Waives Shareholder Meetings, Approves Scheme of Arrangement

The court dispensed with the requirement of convening meetings for equity shareholders, preference shareholders, secured and unsecured creditors where ... Scheme of Arrangement - Dispensing convening meetings of equity and preference shareholders, secured and unsecured creditors to consider and approve, proposed Scheme of Amalgamation under Sections 391 Companies Act, 1956 – Held that:- board of directors of transferor companies no. 1, 2, 3, & 5 and transferee company in their separate meetings respectively unanimously approved proposed Scheme of Amalgamation – Equity shareholders, secured creditors and unsecured creditors of transferor company no. 1,2,3 &5 and transferor company have given their consents/no objections in writing to proposed Scheme of Amalgamation and were found in order – Direction issued to Transferee company having 6 secured and 9002 unsecured creditors, to hold their meeting to seek their approval to proposed Scheme of Amalgamation – Application stands allowed – Decided in favour of Applicants. Issues Involved:1. Dispensation of meetings for equity shareholders, preference shareholders, secured and unsecured creditors.2. Jurisdiction and pending applications.3. Incorporation details and share capital of transferor and transferee companies.4. Scheme of Arrangement and its benefits.5. Share exchange ratio.6. Pending proceedings under the Companies Act.7. Approval of the Scheme by the Board of Directors.8. Consent of equity shareholders and unsecured creditors.9. Directions for convening meetings of secured and unsecured creditors.10. Quorum and procedural requirements for meetings.11. Notices and publication requirements.12. Directions for conducting meetings.13. Fees for Chairpersons and Alternate Chairpersons.Issue-wise Detailed Analysis:1. Dispensation of Meetings:The court was approached to dispense with the requirement of convening meetings of equity shareholders, preference shareholders, secured and unsecured creditors of the transferor and transferee companies. The court agreed to dispense with these meetings where consents/no objections were provided in writing by all relevant parties.2. Jurisdiction and Pending Applications:The registered offices of transferor companies no. 1 to 3 and the transferee company are situated within the jurisdiction of the Delhi High Court. However, transferor companies no. 4 and 5 have their registered offices in Gurgaon, and separate applications for sanction of the Scheme of Arrangement are pending in the competent court.3. Incorporation Details and Share Capital:The judgment provides a detailed history of the incorporation and changes in names of the transferor and transferee companies, including their present authorized and paid-up share capital. For example, the transferee company was originally incorporated as Uppal Hotels Private Limited and later changed its name to DLF Home Developers Limited.4. Scheme of Arrangement and Its Benefits:The Scheme of Arrangement involves the amalgamation of transferor companies no. 1 to 4 and the demerger of the Real Estate Undertaking of transferor company no. 5 into the transferee company. The Scheme aims to optimize resources, achieve cost savings, and improve management efficiency.5. Share Exchange Ratio:The Scheme specifies the share exchange ratio, stating that the transferee company will issue and allot equity shares to the shareholders of transferor companies no. 2 and 3. For instance, the transferee company shall allot 10,44,513 equity shares of Rs. 10/- each to DLF Limited for transferor company no. 2.6. Pending Proceedings under the Companies Act:It was submitted that no proceedings under Sections 235 to 251 of the Companies Act, 1956 and/or Sections 206 to 229 of the Companies Act, 2013 are pending against the applicant companies.7. Approval of the Scheme by the Board of Directors:The Board of Directors of the transferor and transferee companies unanimously approved the proposed Scheme of Arrangement in their meetings held on 31st March, 2015 and 27th March, 2015, respectively.8. Consent of Equity Shareholders and Unsecured Creditors:The equity shareholders and unsecured creditors of the transferor companies no. 1, 2, and 3, as well as the equity and preference shareholders of the transferee company, provided their consents/no objections in writing. These consents were examined and found in order, leading to the dispensation of convening their meetings.9. Directions for Convening Meetings of Secured and Unsecured Creditors:The court directed the convening of meetings for the secured and unsecured creditors of the transferee company on 5th September, 2015. Specific individuals were appointed as Chairperson and Alternate Chairperson to conduct these meetings.10. Quorum and Procedural Requirements for Meetings:The quorum for the meetings of secured creditors was set at 2 in number and more than 25% in value of the total secured debt, while for unsecured creditors, it was set at 200 in number and more than 25% in value of the total unsecured debt. Provisions were made for adjournment and proxy voting.11. Notices and Publication Requirements:Notices for the meetings, along with copies of the Scheme of Arrangement, were to be sent by ordinary post at least 21 days before the meeting date. Notices were also to be published in the Delhi editions of 'Indian Express' (English) and 'Jansatta' (Hindi).12. Directions for Conducting Meetings:The Chairpersons and Alternate Chairpersons were given the liberty to issue suitable directions to ensure the meetings were conducted in a just, free, and fair manner.13. Fees for Chairpersons and Alternate Chairpersons:The fees for the Chairpersons and Alternate Chairpersons were set at Rs. 50,000/- each, in addition to meeting their incidental expenses. They were required to file their reports within two weeks from the date of the meetings.Conclusion:The application was allowed in the terms specified, facilitating the proposed Scheme of Arrangement and the necessary procedural steps for its approval.