2021 (8) TMI 1148 - Tri - Companies Law

Tribunal approves Emami Realty-Oriental Sales demerger scheme, compliance with statutory formalities required

The Tribunal sanctioned the Scheme of Arrangement (demerger) between Emami Realty Limited and Oriental Sales Agencies (India) Private Limited, effective ... Sanction of Scheme of Arrangement (demerger) - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions regarding issuance of various notices also issued. The scheme is approved - application allowed. Issues Involved:1. Sanction of the Scheme of Arrangement (demerger) between Emami Realty Limited and Oriental Sales Agencies (India) Private Limited.2. Compliance with statutory requirements and accounting standards.3. Observations and objections raised by the Regional Director, Ministry of Corporate Affairs.4. Approval and procedural compliance by shareholders and creditors.5. Transfer of assets, liabilities, and employees.6. Issuance of shares by the Resulting Company to the shareholders of the Demerged Company.Detailed Analysis:1. Sanction of the Scheme of Arrangement (demerger):The application was filed under Section 230(6) read with Section 232(3) of the Companies Act, 2013, seeking sanction of the Scheme of Arrangement (demerger) between Emami Realty Limited (Resulting Company) and Oriental Sales Agencies (India) Private Limited (Demerged Company). The Scheme provides for the demerger from the Appointed Date, 1st April 2019, on the terms and conditions stated in the Scheme.2. Compliance with statutory requirements and accounting standards:The Scheme was approved unanimously by the respective Board of Directors of both companies on 05.03.2021. Statutory Auditors confirmed that the accounting treatment in the Scheme conforms to the accounting standards prescribed under Section 133 of the Companies Act, 2013. No proceedings were pending under Sections 210 to 227 of the Companies Act, 2013 against the Petitioners.3. Observations and objections raised by the Regional Director (RD), Ministry of Corporate Affairs:The RD raised several points, including the Appointed Date, compliance with SEBI Circular, stamp duty payment, and compliance with Accounting Standards. The Petitioners responded to each observation, confirming compliance with the necessary statutory requirements and providing justifications where required. For instance:- The Appointed Date was justified as 1st April 2019, considering the Scheme's approval timeline and public interest.- The Petitioners undertook to pay applicable stamp duty on the transfer of immovable properties.- Compliance with Accounting Standards was confirmed, and necessary undertakings were provided.4. Approval and procedural compliance by shareholders and creditors:Meetings of the Unsecured Creditors of Petitioner No. 1 and Equity Shareholders and Unsecured Creditors of Petitioner No. 2 were dispensed with, given their consent to the Scheme. Meetings of the Equity Shareholders of Petitioner No. 1 were held virtually due to the COVID-19 pandemic, and the Scheme was approved by the requisite majority. The votes cast by public shareholders in favor of the Scheme exceeded those against it, complying with SEBI Circular requirements.5. Transfer of assets, liabilities, and employees:The Tribunal ordered that all property, rights, permissions, licenses, interests, and powers of the Demerged Company related to the Real Estate Undertaking be transferred to the Resulting Company from the Appointed Date. This includes all debts, liabilities, duties, and obligations. Employees of the Demerged Company related to the Real Estate Undertaking shall be engaged by the Resulting Company.6. Issuance of shares by the Resulting Company to the shareholders of the Demerged Company:The Resulting Company shall issue and allot shares to the shareholders of the Demerged Company in accordance with the Scheme. The entitlement ratio of shares was fixed on a fair and reasonable basis, confirmed by Registered Valuers and Merchant Bankers.Conclusion:The Tribunal, after considering the submissions, records, and documents, sanctioned the Scheme of Arrangement (demerger) effective from 1st April 2019. The Tribunal directed the Resulting Company and Demerged Company to comply with all statutory formalities, including filing certified copies of the order with the Registrar of Companies and ensuring compliance with all requisite formalities. The Company Petition (CAA) No. 88/KB/2021 was disposed of accordingly, with the provision for urgent certified copies of the order if applied for.