Tribunal approves Scheme of Arrangement for demerger, enhancing shareholder value

The Tribunal sanctioned the Scheme of Arrangement between Giftease Technologies Private Limited and Cybage Software Private Limited under Sections 230 to 232 of the Companies Act, 2013. The Scheme aimed to demerge the Ecommerce and Retail Sales Business of the Demerged Company into the Resulting Company for shareholder value and growth. The Tribunal found the Scheme fair and compliant, with the Appointed Date set as April 1, 2019. The Transferor Company was directed for dissolution without winding up, and the Petitioner Companies were instructed to file certified copies of the order and Scheme with relevant authorities.

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Issues Involved:
1. Sanction of the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and accounting standards.
3. Approval and compliance of the Scheme by the requisite majority of members and creditors.
4. Clarifications and undertakings by the Petitioner Companies.
5. Observations and recommendations by the Regional Director and Registrar of Companies (ROC).

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Arrangement:
The Tribunal was approached for the sanction of the Scheme of Arrangement between Giftease Technologies Private Limited (Demerged Company) and Cybage Software Private Limited (Resulting Company) under Sections 230 to 232 of the Companies Act, 2013. The Scheme was approved by the Board of Directors of both companies in their respective meetings held on 20th March. The proposed Scheme aimed to demerge the Ecommerce and Retail Sales Business of the Demerged Company into the Resulting Company to maximize shareholder value and enable focused growth.

2. Compliance with Statutory Requirements and Accounting Standards:
The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, filed a report stating that the Scheme is not prejudicial to the interest of shareholders and public, subject to certain conditions. The Petitioner Companies undertook to comply with applicable Accounting Standards, including AS-14 (IND AS-103) and AS-5 (IND AS-8). The Appointed Date of the Scheme was set as April 1, 2019, in compliance with Section 232(6) of the Companies Act, 2013.

3. Approval and Compliance of the Scheme by the Requisite Majority of Members and Creditors:
The Scheme was approved unanimously by the equity shareholders of the Petitioner Companies in meetings held on July 31, 2020. The Petitioner Companies confirmed that there were no secured creditors, and notices were sent to unsecured creditors as directed by the Tribunal. The Scheme did not result in any diminution of liability towards unsecured creditors.

4. Clarifications and Undertakings by the Petitioner Companies:
The Petitioner Companies provided several clarifications and undertakings in response to the observations made by the Regional Director. They confirmed that the Scheme enclosed to the Company Application and Company Petition was identical, with no discrepancies. Notices were served to all regulatory authorities likely to be affected by the Scheme. The Companies also undertook to comply with Section 13 of the Companies Act, 2013, regarding amendments to the Memorandum of Association of the Resulting Company.

5. Observations and Recommendations by the Regional Director and Registrar of Companies (ROC):
The Regional Director's report included several observations, which were addressed by the Petitioner Companies. The ROC, Pune, confirmed that both companies were neither vanishing nor scam-related. The ROC also noted the presence of unsecured creditors but did not provide details of their meetings. The Tribunal accepted the clarifications and undertakings provided by the Petitioner Companies.

Conclusion:
The Tribunal found the Scheme to be fair, reasonable, and compliant with legal provisions. It sanctioned the Scheme, with the Appointed Date fixed as April 1, 2019. The Transferor Company was ordered to be dissolved without winding up. The Petitioner Companies were directed to file certified copies of the order and the Scheme with the Registrar of Companies and the Superintendent of Stamps within specified timeframes. All concerned regulatory authorities were instructed to act on the certified copy of the order and the Scheme.

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