2016 (10) TMI 1371 - HC - Companies Law

Court approves Amalgamation Scheme between IT and BPO companies, with directives for compliance and filing.

In re : Accenture Services Private Limited

The Court sanctioned the Scheme of Amalgamation between two companies engaged in IT and BPO services, finding it fair and compliant with statutory ... Sanction of scheme of Amalgamation - Sections 391 to 394 of the Companies Act, 1956 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. No other party has come forward to oppose the Scheme in the Court. Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition No. 317 of 2016 filed by the Transferor Company is made absolute in terms of the prayer made under sub- clauses (a) to (d) of Clause 35 and the Company Scheme Petition No. 318 of 2016 filed by the Transferee Company is made absolute in terms of the prayer made under sub-clauses (a) to (d) of Clause 34. The Petitioners are directed to file a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with E-Form INC 28 in addition to physical copy as per the relevant provisions of the Companies Act, 1956/ 2013, which ever is applicable - application disposed off. Issues Involved:1. Sanction of the Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.2. Compliance with statutory and regulatory requirements.3. Objections raised by the Regional Director and responses thereto.4. Final approval and directions by the Court.Detailed Analysis:1. Sanction of the Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956:The Court was approached to sanction a Scheme of Amalgamation of Accenture Services Private Limited (Transferor Company) with Accenture Solutions Private Limited (Transferee Company). The Transferor Company is engaged in IT services, while the Transferee Company is involved in business process outsourcing (BPO) activities. The Scheme aims to combine their operations for operational efficiency and cost minimization, in line with Accenture's global entity reduction program. The amalgamation will lead to a larger and stronger entity with greater operational capacity.2. Compliance with statutory and regulatory requirements:The Petitioners complied with all directions passed in the respective Company Summons for Directions and filed necessary affidavits of compliance. They undertook to comply with all statutory requirements under the Companies Act, 1956/2013 and the rules thereunder. The Official Liquidator reported that the Transferor Company’s affairs were conducted properly and recommended its dissolution without winding up.3. Objections raised by the Regional Director and responses thereto:The Regional Director raised several objections, which were addressed by the Petitioners as follows:- Tax Implications: The Scheme complies with Section 2(1B) of the IT Act, and the Transferee Company will comply with the IT Authority's decisions.- Accounting Standards: The Transferee Company will comply with applicable accounting standards, including AS-5.- Board Resolution Discrepancy: The Transferor Company rectified the incorrect Board Resolution filed with the Ministry of Corporate Affairs.- Capital Reduction Compliance: The Scheme does not involve the creation or utilization of the securities premium account, and Sections 100-104 of the Companies Act, 1956 are not applicable.- STPI Approvals: The Transferee Company will obtain necessary approvals from STPI authorities post-High Court approval.- Authorized Share Capital Increase: The Transferee Company will increase its authorized share capital as required before the Scheme becomes effective.- Segment Reporting: There is no requirement for separate segment reporting for US debt collection licenses under Accounting Standard 17.- Alteration of Memorandum of Association: The Transferee Company will comply with the provisions of the Companies Act, 2013 for altering its Memorandum of Association.- FEMA Compliance: The Transferee Company will comply with the Foreign Exchange Management Act, 1999 and related guidelines for issuing shares to non-resident shareholders.The Regional Director was satisfied with the undertakings given by the Petitioners, and all undertakings were accepted by the Court.4. Final approval and directions by the Court:The Court found the Scheme to be fair, reasonable, and not violative of any law or public policy. Since all statutory compliances were fulfilled, the Court sanctioned the Scheme of Amalgamation, directing the Petitioners to file the Scheme with the concerned Registrar of Companies electronically and physically. The Petitioners were also directed to pay costs to the Regional Director and the Official Liquidator. The Transferee Company was instructed to lodge a copy of the Order with the Superintendent of Stamps for adjudication of stamp duty within 60 days. All authorities were directed to act on a copy of the order along with the Scheme and Form of Minutes authenticated by the Company Registrar, High Court (O.S.), Bombay.