Companies Act: Dispensing with Shareholder Meetings for Scheme Approval

The court granted the joint application under Sections 391 to 394 of the Companies Act, 1956, dispensing with the need for meetings of equity shareholders, secured, and unsecured creditors for the approval of a Scheme of Arrangement between two companies. The Scheme involved merging the Demerged Undertaking into the resulting company, with unanimous approval from both companies' Boards of Directors and consent from shareholders and creditors. As no pending proceedings existed against the applicant companies, the court approved the application as presented, allowing for the dispensation of meetings as requested.

---

---

Issues:
Application under Sections 391 to 394 of the Companies Act, 1956 seeking dispensation of meetings for approval of Scheme of Arrangement between two companies.

Analysis:
The judgment pertains to a joint application filed under Sections 391 to 394 of the Companies Act, 1956 by two companies seeking directions to dispense with the requirement of convening meetings of their equity shareholders, secured, and unsecured creditors for the approval of a proposed Scheme of Arrangement. The demerged company, originally incorporated under the Indian Companies Act, 1913, and the resulting company, incorporated under the Companies Act, 1956, are both based in New Delhi. The demerged company's authorized share capital is divided into equity shares and preference shares, while the resulting company has a separate share capital structure. The Scheme of Arrangement involves a merger of the Demerged Undertaking into the resulting company, aiming for clear management focus and individual growth strategies for each entity.

The share exchange ratio under the Scheme stipulates the issuance of equity shares of the resulting company to shareholders of the demerged company in a specified ratio. Notably, no proceedings under relevant sections of the Companies Act, 1956 or 2013 are pending against the applicant companies. Both companies' Boards of Directors have unanimously approved the Scheme, and consents or no objections from equity shareholders and creditors have been obtained and found in order. For the demerged company, majority consents have been received from equity shareholders and creditors, while for the resulting company, all shareholders and the sole unsecured creditor have consented to the Scheme. Consequently, the court dispensed with the requirement for meetings for both companies and allowed the application in the terms presented.

---