2021 (11) TMI 26 - Tri - Companies Law

Merger Scheme under Companies Act, 2013: Key Shareholder Decisions and Compliance Steps

Medibios Laboratories Limited Versus Emil Pharmaceutical Industries Private Limited

The case involves a Scheme of Merger by Absorption between two companies under Sections 230 to 232 of the Companies Act, 2013. The merger was approved by ... Approval of Scheme of Merger by Absorption - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions regarding issuance of various notices also issued. Issues Involved:1. Scheme of Merger by Absorption2. Approval of the Scheme by Board of Directors3. Share Capital Structure4. Benefits of the Merger5. Share Entitlement Ratio6. Meetings of Equity Shareholders7. Notices and Advertisements8. Appointment of Chairman for Meetings9. Appointment of Scrutinizer10. Quorum and Voting Procedures11. Secured Creditors' Consent12. Unsecured Creditors' Consent13. Notices to Regulatory Authorities14. Appointment of Chartered Accountant for Scrutiny15. Hosting Notices on Websites16. Filing Affidavit of ServiceIssue-wise Detailed Analysis:1. Scheme of Merger by Absorption:The Scheme involves the merger by absorption of Medibios Laboratories Limited (First Applicant Company/Transferor Company) and Emil Pharmaceuticals Industries Private Limited (Second Applicant Company/Transferee Company) under Sections 230 to 232 of the Companies Act, 2013.2. Approval of the Scheme by Board of Directors:The Board of Directors of both Applicant Companies approved the proposed Scheme on December 7, 2020, with the Appointed Date as April 1, 2020. The Board Resolutions are annexed as Annexure D & Annexure D1.3. Share Capital Structure:The Authorized, Issued, Subscribed, and Paid-up Share Capital of the First Applicant Company is Rs. 10,00,00,000/- and Rs. 7,10,46,000/- respectively. For the Second Applicant Company, it is Rs. 10,00,00,000/- and Rs. 7,64,56,140/- respectively.4. Benefits of the Merger:The merger aims to consolidate businesses, reduce administrative efforts, combine activities and operations, save costs, enhance financial resource-raising ability, improve cash management, and maximize shareholder value.5. Share Entitlement Ratio:Upon the Scheme being effective, the Transferee Company will issue and allot equity shares to each equity shareholder of the Transferor Company in the ratio of 672 shares of EMIL for every 1000 shares of MLL.6. Meetings of Equity Shareholders:Meetings of the Equity Shareholders of both Applicant Companies are to be convened on November 23, 2021, for considering and approving the Scheme.7. Notices and Advertisements:Notices convening the Meetings, along with a copy of the Scheme and other relevant documents, shall be sent to Equity Shareholders at least 30 days prior. Notices shall also be advertised in 'Free Press Journal' and 'Navshakti' newspapers.8. Appointment of Chairman for Meetings:Mr. Tushar Anil Korday is appointed as the Chairman for the meetings of the Equity Shareholders of both Applicant Companies.9. Appointment of Scrutinizer:CS Pooja Gandhi is appointed as the Scrutinizer for the meetings, to be paid Rs. 20,000/- per meeting.10. Quorum and Voting Procedures:The quorum for the meetings shall be as prescribed under Section 103 of the Companies Act, 2013. Voting by proxy or authorized representative is permitted.11. Secured Creditors' Consent:The First Applicant Company has one secured creditor, and the Second Applicant Company has two. Written consent affidavits from all secured creditors will be obtained and submitted to the Tribunal.12. Unsecured Creditors' Consent:The First Applicant Company has 234 unsecured creditors amounting to Rs. 10,11,96,739/-, and the Second Applicant Company has 199 unsecured creditors amounting to Rs. 14,21,12,376/-. Notices will be issued to all unsecured creditors, allowing them to submit representations to the Tribunal within 30 days.13. Notices to Regulatory Authorities:Notices of the present Application will be served on the Regional Director, Registrar of Companies, Official Liquidator, Income Tax Authority, and concerned GST Authorities. If no response is received within 30 days, it will be presumed that they have no objection.14. Appointment of Chartered Accountant for Scrutiny:M/s. CA Hemant K. Shah of Hemant K. Shah & Associates is appointed to assist the Official Liquidator in scrutinizing the books of accounts of the Transferor Company for the last five years, with a consolidated fee of Rs. 2,20,000/-.15. Hosting Notices on Websites:The Applicant Companies shall host the notices on their respective websites.16. Filing Affidavit of Service:The Applicant Companies are to file an affidavit of service with the Registry, proving the dispatch of notices to creditors and regulatory authorities, and report compliance to the Tribunal.