2020 (12) TMI 1177 - Tri - Companies Law

Company Merger Scheme Approved for Efficiency & Consolidation

The Tribunal approved the proposed company Scheme for the merger by absorption of multiple companies. The Scheme aimed to achieve operational and ... Approval of scheme of Merger by Absorption - section 230-232 of Companies Act - HELD THAT:- This Bench hereby dispensed with the meeting of unsecured Creditors of Applicant Company No. 1. further, this Bench directs to the Applicant No. 1 to issue notice to all the Unsecured Creditors Under Section 230(3) of Companies Act, 2013 with such direction that they may submit their representation, if any, to the Tribunal and copies of such representation shall simultaneously be served upon the respective Applicant No. 1. The Applicant Companies shall serve notice upon the Official Liquidator, High Court, Bombay pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Tribunal hereby appoint a Chartered Account from the Panel of Official Liquidator/MCA to scrutinize the books of accounts of the Applicant No. 1 and Applicant No. 2 and submit its report to the Tribunal as Proposed or suggested by the office of the Official Liquidator. The scheme is approved - application allowed. Issues involved:Proposed company Scheme seeking Merger by Absorption of multiple companies, approval of Board resolutions, dispensation of shareholder meetings, absence of Secured Creditors, treatment of Unsecured Creditors, notice to regulatory authorities, appointment of Chartered Accountant, compliance with Companies Act, 2013.Detailed Analysis:1. The Tribunal heard arguments regarding a proposed company Scheme for the merger by absorption of multiple companies. The Applicant Companies sought relief as per their prayer relief clause.2. The Applicant Companies' Counsel stated that the proposed Scheme aims to merge several companies for operational synergies and efficiency. The Board of Directors of the companies have approved the Scheme, with different companies having registered offices in different jurisdictions.3. The Appointed Date for the Scheme was mentioned as the 1st day of April 2019, and it was highlighted that the Applicant Companies are not currently engaged in any business activities.4. The rationale for the Proposed Company Scheme included achieving operational and management efficiency through consolidation of businesses and reducing regulatory and legal compliance obligations post-merger.5. It was noted that the First Transferor Company is a wholly-owned subsidiary of the Transferee Company, and all equity shareholders gave their consent to the Scheme.6. The meeting of Equity Shareholders and Preference Shareholder of the Second Transferor Company was dispensed with as they all consented to the Scheme.7. There were no Secured Creditors in the Applicant Companies, and the meeting of Unsecured Creditors was dispensed with for the First Transferor Company.8. For the Second Transferor Company, one unsecured creditor representing a significant portion of the total outstanding debt gave consent to the Scheme, leading to the dispensation of the meeting of Unsecured Creditors.9. The Applicant Companies were directed to serve notices to various regulatory authorities and the Official Liquidator, with a Chartered Accountant appointed to scrutinize their books of accounts.10. The Companies were instructed to host notices and the Scheme on their websites, file proof of compliance with the Tribunal, and report the same.11. The judgment was pronounced in open Court, with the file to be consigned to records.