Approval of Scheme for Financial Restructuring and Amalgamation

The Tribunal sanctioned the Composite Scheme of Arrangement and Amalgamation between two companies under the Companies Act, 2013. The scheme aimed to achieve financial restructuring and consolidation benefits. With no objections raised, the scheme was approved by equity shareholders. The reduction of share capital and compliance with statutory requirements were unanimously approved. The Tribunal accepted the Regional Director's report and ordered the dissolution of the Transferor Company without winding up. The scheme was deemed fair and compliant with the law, with necessary compliances fulfilled.

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Issues Involved:
1. Sanction of the Composite Scheme of Arrangement and Amalgamation under sections 230 to 232 read with section 66 of the Companies Act, 2013.
2. Financial restructuring and reduction of share capital of the Transferee Company.
3. Compliance with statutory requirements and Accounting Standards.
4. Approval and conduct of meetings of shareholders and creditors.
5. Observations and compliance with the Regional Director's report.
6. Dissolution of the Transferor Company without winding up.

Issue-wise Detailed Analysis:

1. Sanction of the Composite Scheme of Arrangement and Amalgamation:
The Tribunal was petitioned to sanction a Composite Scheme of Arrangement and Amalgamation between RKD Trendy Retailers Pvt Ltd (Transferor Company) and Himalchuli Food Products Limited (Transferee Company) under sections 230 to 232 read with section 66 of the Companies Act, 2013. The objective was to consolidate and restructure the business of the Transferee Company to achieve benefits such as financial restructuring, increased net worth, and improved financial health. The Tribunal noted that no objections were raised by any party, creditor, or regulatory authority, and the scheme was approved by the requisite majority of equity shareholders.

2. Financial Restructuring and Reduction of Share Capital:
The Transferee Company faced continuous losses, necessitating a reduction in share capital to reflect the true financial health of the company. The scheme proposed to create a "Capital Restructuring Account" from its paid-up Equity Share Capital, enabling a rational capital structure commensurate with its remaining business and assets. The reduction of capital was approved unanimously by the equity shareholders of the Transferee Company in a general meeting held on 26th September 2019, and the necessary e-form MGT-14 was filed.

3. Compliance with Statutory Requirements and Accounting Standards:
The Petitioner Companies undertook to comply with all statutory requirements under the Companies Act, 2013, and the applicable Accounting Standards, including AS-14 (IND AS-103) and AS-5 (IND AS-8). The Tribunal accepted these undertakings and directed the companies to ensure compliance with all necessary statutory requirements.

4. Approval and Conduct of Meetings of Shareholders and Creditors:
Meetings of the respective Equity Shareholders of the Transferor and Transferee Companies were held on 22nd November 2019, where the scheme was approved by the requisite majority without any modifications. The Tribunal granted dispensation for holding meetings of Secured Creditors as there were none. Individual notices were issued to all Unsecured Creditors, and affidavits of service were filed with the registry.

5. Observations and Compliance with the Regional Director's Report:
The Regional Director's report dated 29th June 2020 highlighted the need for compliance with Accounting Standards and the appointed date of the scheme. The Petitioner Companies undertook to comply with these requirements, confirming that the appointed date would be 1st April 2018, and the scheme would take effect upon filing with the Registrar of Companies. The Tribunal accepted these submissions.

6. Dissolution of the Transferor Company Without Winding Up:
The Official Liquidator's report dated 29th June 2020 stated that the affairs of the Transferor Company had been conducted properly and recommended its dissolution without winding up. The Tribunal ordered the dissolution of the Transferor Company without winding up upon the scheme becoming effective.

Conclusion:
The Tribunal found the Composite Scheme of Arrangement and Amalgamation to be fair, reasonable, and compliant with the law. All requisite statutory compliances were fulfilled, and the scheme was sanctioned with the appointed date fixed as 1st April 2018. The Transferor Company was ordered to be dissolved without winding up, and the Petitioner Companies were directed to lodge certified copies of the order and the scheme with the concerned authorities within specified timeframes. The Tribunal's order was pronounced in open court, and all regulatory authorities were directed to act on the certified copy of the order.

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