2021 (9) TMI 1160 - Tri - Companies Law

Tribunal approves Scheme of Arrangement for Companies

Embassy Services Private Limited and Ors. Versus Embassy Property Services Private Limited and Ors.

The Tribunal in C.A.(CAA) No. 34/BB/2021 approved the Scheme of Arrangement proposed by the Applicant Companies. Meetings of Secured and Unsecured ... Sanction of scheme of Amalgamation - seeking to dispense with the meeting of Equity Shareholders of the Applicant Companies - seeking to direct for convene the meeting of Secured and Unsecured Creditors of the Applicant Companies etc. - section 230 to 232 of the Companies Act, 2013, and other Applicable provisions of the Companies Act, 2013 R/w. Companies (CAA) Rules, 2016 - HELD THAT:- Various directions with regard to various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed. Issues Involved:1. Dispensation of meetings of Equity Shareholders.2. Convening meetings of Secured and Unsecured Creditors.3. Compliance with the Companies Act, 2013.4. Approval and adoption of the Scheme of Arrangement.5. Appointment of Chairpersons and Scrutinizers for meetings.6. Publication of notices for meetings.7. Filing of reports and petitions post-meetings.Issue-wise Detailed Analysis:1. Dispensation of Meetings of Equity Shareholders:The Tribunal considered the application filed by the Applicant Companies seeking to dispense with the meetings of Equity Shareholders. The Chartered Accountants certified the details of the equity shareholders, and affidavits of no objection were submitted by the shareholders. The Tribunal was convinced with the case made out by the Applicants and dispensed with the meetings of Equity Shareholders of all the Applicant Companies.2. Convening Meetings of Secured and Unsecured Creditors:The Tribunal directed convening meetings of Secured Creditors of Applicant Companies Nos. 1, 3, and 4, and Unsecured Creditors of all Applicant Companies. The meetings were scheduled on 04.10.2021 through Video Conferencing or Other Audio Visual Means. The quorum for these meetings was specified, with the requirement for Secured Creditors being 30% of total value and for Unsecured Creditors being 30% of total value. Specific individuals were appointed as Chairpersons and Scrutinizers for these meetings, with remuneration details provided.3. Compliance with the Companies Act, 2013:The Tribunal verified that the Applicant Companies followed the extant provisions of the Companies Act, 2013, in framing the Scheme of Arrangement. The Statutory Auditors issued certificates confirming compliance with applicable Indian accounting standards notified by the Central Government under the Act, 2013.4. Approval and Adoption of the Scheme of Arrangement:The Scheme of Arrangement was approved by the Board of Directors of the Applicant Companies in their respective meetings held on 24.03.2021. The rationale for the Scheme included simplified management structure, better administration, rationalization of business processes, elimination of duplication, and reduction in legal and regulatory compliances.5. Appointment of Chairpersons and Scrutinizers for Meetings:The Tribunal appointed specific individuals as Chairpersons and Scrutinizers for the meetings of Secured and Unsecured Creditors. The remuneration for the Chairpersons was set at Rs. 40,000/- per meeting and for the Scrutinizers at Rs. 20,000/- per meeting.6. Publication of Notices for Meetings:The Tribunal directed that the notices for the meetings of Secured and Unsecured Creditors be published in an English Daily 'The Hindu' and in Kannada Daily 'Udayavani'.7. Filing of Reports and Petitions Post-Meetings:The Chairpersons and Scrutinizers were directed to file their respective reports with the Registry of the Tribunal within two weeks from the date of conclusion of the respective meetings. The Applicant Companies were granted two weeks thereafter to file appropriate Company Petitions to seek sanction of the Scheme, subject to all statutory compliances.Conclusion:The Tribunal disposed of C.A.(CAA) No. 34/BB/2021 with detailed directions for convening meetings of Secured and Unsecured Creditors, dispensing with meetings of Equity Shareholders, and ensuring compliance with statutory requirements. The process included the appointment of officials for conducting meetings, publication of notices, and subsequent filing of reports and petitions. The Tribunal provided a structured approach to ensure the Scheme of Arrangement was considered and approved in accordance with the law.