2019 (11) TMI 1445 - Tri - Companies Law

Approval of Amalgamation Scheme for Enhanced Efficiency and Financial Strength

In Re. : M/s. Venexa Technologies Private Limited, M/s. Martiza Polymers Private Limited And M/s. Nand Composites Private Limited

The Tribunal sanctioned the Scheme of Amalgamation involving three companies, merging two Transferor Companies with a Transferee Company to achieve ... Sanction of Amalgamation Scheme - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- In light of Consent Affidavits submitted by the all Equity Shareholders of the Applicant Companies the meetings of the Equity Shareholders are hereby dispensed with. Applicant Companies, respectively and severally, are directed to file an Affidavit of Services in the Registry proving publication and dispatch of notices as stated hereinabove within 7 days from the dispatch of notices and publication in the newspapers. Application disposed off. Issues involved:1. Sanction sought under Sections 230-232 of the Companies Act, 2013 for a Scheme of Amalgamation.2. Board approval for the proposed Scheme with appointed date and benefits anticipated.3. Consent of Equity Shareholders and notices to Creditors.4. Directions for public notice, individual notices to creditors, and serving notices to authorities.5. Appointment of Chartered Accountants for scrutiny of books of accounts.Issue 1: Sanction sought under Sections 230-232 of the Companies Act, 2013 for a Scheme of Amalgamation:The Tribunal considered the application seeking sanction for the Scheme of Amalgamation involving three companies. The Scheme aimed at merging two Transferor Companies with a Transferee Company to create synergy, financial strength, diversified portfolio, cost savings, and economies of scale. The Board of Directors had approved the proposed Scheme, setting the appointed date as 1st April, 2019. The Tribunal reviewed the submissions and ordered dispensing with the meetings of Equity Shareholders based on their consent affidavits.Issue 2: Board approval for the proposed Scheme with appointed date and benefits anticipated:The Board of Directors of the Applicant Companies had approved the proposed Scheme, highlighting various benefits anticipated from the merger. These included creating synergy, financial strength, diversified business portfolio, cost savings, and achieving economies of scale. The proposed merger aimed to enhance operational efficiency, streamline business processes, and reduce administrative expenses by pooling financial resources and centralizing management.Issue 3: Consent of Equity Shareholders and notices to Creditors:The Equity Shareholders of the Applicant Companies had given their individual consents to the proposed Scheme, as evidenced by the submitted Consent Affidavits. The Tribunal dispensed with the meetings of Equity Shareholders based on this consent. Additionally, the companies undertook to issue individual notices to Unsecured Creditors exceeding a specified value, ensuring compliance with legal requirements and transparency in the amalgamation process.Issue 4: Directions for public notice, individual notices to creditors, and serving notices to authorities:The Tribunal directed the Applicant Companies to publish a joint Public Notice about the proposed Scheme in two newspapers with wide circulation, inviting objections within 30 days. Individual notices were mandated for Secured and Unsecured Creditors exceeding a specified value, along with serving notices to Income Tax Authorities, Central Government, Registrar of Companies, and Official Liquidator. These directions aimed to ensure transparency, compliance with legal procedures, and providing opportunities for stakeholders to raise objections or representations.Issue 5: Appointment of Chartered Accountants for scrutiny of books of accounts:M/s. PRASS & Co., Chartered Accountants, Pune, were appointed to assist the Official Liquidator in scrutinizing the books of accounts of the Transferor Companies for the last 3 years. The Transferor Companies were directed to pay fees to the appointed Chartered Accountants. This step aimed to ensure a thorough financial examination and compliance with accounting standards in the amalgamation process.This detailed analysis covers the key issues addressed in the Tribunal's judgment regarding the Scheme of Amalgamation under the Companies Act, 2013, emphasizing compliance, transparency, and stakeholder involvement in the process.