Scheme of amalgamation and consequential preference share capital reduction sanctioned after shareholder approval and regulatory compliance.

A Scheme of Arrangement for amalgamation of the transferor company with the transferee company was sanctioned because it had received the required shareholder and creditor approval, no objections were filed after advertisement, and the Official Liquidator reported no prejudice to members or public interest. The Regional Director's concerns were addressed through undertakings and disclosures, including compliance with accounting standards and income-tax law. The consequential reduction of preference share capital was also confirmed because it followed from the amalgamation and did not involve diminution of unpaid share capital liability or payment out of paid-up capital, so the reduction procedure was dispensed with. The related minutes under section 103(1) were approved.

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Issues: Whether the Scheme of Arrangement providing for amalgamation of the transferor company with the transferee company and consequential reduction of preference share capital deserved sanction, and whether the related confirmation of minutes under section 103(1) was warranted.

Analysis: The Scheme had been approved by the requisite classes of shareholders and creditors, with meetings dispensed with on the basis of written consents. No objections were received after advertisement of the petitions. The Official Liquidator reported that the affairs of the transferor company had been conducted within its objects and not prejudicially to members or public interest, while seeking preservation of books and records under section 396A. The Regional Director's observations were met by undertakings and disclosures, including compliance with accounting standards and income-tax law. The reduction of preference share capital was consequential to amalgamation and did not involve diminution of liability in respect of unpaid share capital or payment to shareholders of paid-up capital, so the procedure for reduction was dispensed with. The Court found the Scheme to be in the interest of shareholders, creditors, and the public interest.

Conclusion: The Scheme of Arrangement was sanctioned, the consequential reduction of preference share capital was confirmed, and the minutes under section 103(1) were approved.

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