2021 (11) TMI 482 - Tri - Companies Law

Tribunal approves Amalgamation Scheme for three companies, dissolves two without winding up.

The Tribunal sanctioned the Composite Scheme of Amalgamation of three companies under Sections 230 to 232 of the Companies Act, 2013, resulting in the ... Sanction of scheme of amalgamation - Appointed Date under a scheme and effectivity from such date - scheme under Sections 230-232 - requirement of shareholder/creditor meetings and approvals - pooling of interests method under Ind AS 103 for common-control business combinations - acceptance of Regional Director reports and undertakings as condition of sanction - intra-group exemption from Competition Commission of India approval - obligations arising from stock-exchange/SEBI no-objection letters and related listing compliancesSanction of scheme of amalgamation - Appointed Date under a scheme and effectivity from such date - Sanction of the Composite Scheme of Amalgamation of Bamnipal Steel Limited and Tata Steel BSL Limited into Tata Steel Limited and fixation of the Appointed Date. - HELD THAT: - After considering the material on record, the petitions, reports and the responses filed by the Petitioner Companies, the Tribunal found the Scheme to be fair and reasonable, not violative of law and not contrary to public policy. The Tribunal accepted the Petitioner Companies' submissions that statutory compliances required for convening or dispensing with meetings were complied with in accordance with earlier CSA Orders and that the Scheme specifies the Appointed Date as April 1, 2019. In view of the foregoing, and having regard to the clarifications and undertakings on record, the Company Scheme Petition was made absolute and the Scheme sanctioned with the Appointed Date fixed as April 1, 2019. [Paras 31, 42, 43]The Composite Scheme is sanctioned and the Appointed Date is fixed as April 1, 2019.Acceptance of Regional Director reports and undertakings as condition of sanction - obligations arising from stock-exchange/SEBI no-objection letters and related listing compliances - pooling of interests method under Ind AS 103 for common-control business combinations - Responses and undertakings given by the Petitioner Companies to the observations of the Regional Directors (Western Region, Mumbai and Northern Region, New Delhi) were considered and accepted, and the Petitioner Companies were directed to comply with those undertakings. - HELD THAT: - The Tribunal examined the RD, Mumbai and RD, New Delhi reports and the affidavits/annexures filed in response. It recorded that replies to several observational paragraphs were satisfactory and that the Petitioner Companies undertook to: comply with applicable accounting standards including Ind AS 103 (pooling of interests accounting for common control combinations) and other relevant accounting standards; ensure that capital reserves arising out of amalgamation are not used for dividend distribution if so required by accounting treatment; comply with SEBI/listing requirements in relation to convening of meetings and vote validations; and adhere to other statutory and regulatory requirements. Those clarifications and undertakings were accepted and the Petitioner Companies were directed to comply with them. [Paras 21, 23, 24, 31, 37]The Tribunal accepted the Petitioner Companies' clarifications and undertakings in response to the RD reports and directed compliance with the same.Intra-group exemption from Competition Commission of India approval - acceptance of RD's observation on CCI clearance - Whether approval of the Competition Commission of India was required for the amalgamation. - HELD THAT: - The Petitioner Companies contended that the amalgamation falls under the intra-group exemption (Item 9 to Schedule 1 of the CCI Regulations) and therefore CCI approval was not required. Having considered the submissions, the Tribunal accepted this position and recorded that CCI approval had not been obtained because it was not necessary under the applicable laws and rules. [Paras 29, 31]CCI approval was not required and the Tribunal noted that no CCI approval had been obtained.Treatment of shareholder and creditor complaints and objections - requirements under proviso to Section 230(4) regarding who may object - Resolution of shareholder/creditor representations and disposal of related company applications challenging the share exchange ratio or scheme. - HELD THAT: - Petitioner Company 3 received representations from certain shareholders and creditors concerning the share exchange ratio and other matters. The Tribunal noted the Petitioners' responses that objections must meet the statutory thresholds under the proviso to Section 230(4) to be maintainable, pointed to the communications and responses sent to complainants and regulators (including SEBI's closure of a complaint), and observed that the Petitioner Company 3 had filed appropriate replies. On that basis, the Tribunal found that the grievances raised in the cited company applications were addressed and there was no surviving objection requiring further relief. [Paras 40, 41]The applications challenging the scheme (CA 156 of 2021 and CA 261 of 2021) were dismissed as the objections were addressed and no maintainable grievance survived.Filing of certified copy of order and attendant compliance steps - Post-sanction compliance directions to the Petitioner Companies and concerned authorities. - HELD THAT: - Upon sanctioning the Scheme, the Tribunal directed the Petitioner Companies to file a certified copy of the order and the Scheme with the relevant Registrar(s) of Companies electronically using the prescribed e-form within the stipulated period, to lodge the order and Scheme with the Superintendent of Stamps for stamp duty adjudication, and recorded that all concerned authorities are to act on the certified copy. It also left the liberty for any interested person to apply for further directions or modifications if necessary. [Paras 44, 45, 46, 47]Petitioner Companies and authorities directed to carry out statutory post-sanction filings and compliance as specified.Final Conclusion: The National Company Law Tribunal, Mumbai Bench sanctioned the Composite Scheme of Amalgamation, fixed the Appointed Date as April 1, 2019, accepted the Petitioner Companies' clarifications and undertakings in response to Regional Directors' reports, recorded that CCI approval was not required, dismissed the pending challenge applications as resolved, and directed the Petitioner Companies to undertake the statutory post-sanction filings and compliance. Issues Involved:1. Sanction of the Composite Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.2. Compliance with statutory requirements and observations by the Regional Directors (RD, Mumbai and RD, New Delhi).3. Objections and representations from shareholders and creditors.4. Compliance with SEBI, Stock Exchange, and other regulatory guidelines.5. Approval and procedural compliance for the Scheme.Detailed Analysis:1. Sanction of the Composite Scheme of Amalgamation:The Petitioner Companies filed a joint Company Scheme Petition seeking the Tribunal's sanction for the Composite Scheme of Amalgamation of Bamnipal Steel Limited and Tata Steel BSL Limited into and with Tata Steel Limited under Sections 230 to 232 of the Companies Act, 2013. The Scheme involves the amalgamation of Petitioner Company 2 and Petitioner Company 3 into Petitioner Company 1, resulting in the dissolution of Petitioner Company 2 and Petitioner Company 3 without winding up. The Tribunal sanctioned the Scheme with the 'Appointed Date' as April 1, 2019.2. Compliance with Statutory Requirements and Observations by Regional Directors:The RD, Mumbai, and RD, New Delhi, provided their reports with observations on the proposed Scheme. The Petitioner Companies responded to these observations with necessary clarifications and undertakings, which the Tribunal accepted. Key observations included compliance with applicable accounting standards, confirmation of the appointed date, and ensuring the Scheme's approval by requisite majorities. The Tribunal directed the Petitioner Companies to comply with these undertakings.3. Objections and Representations from Shareholders and Creditors:Petitioner Company 3 received objections from some shareholders and unsecured creditors regarding the Scheme. The objections primarily concerned the share exchange ratio and the valuation report's age. The Petitioner Companies responded appropriately to these objections, and the Tribunal noted that the Scheme had been approved by an overwhelming majority of equity shareholders. The Tribunal dismissed the objections, stating that the grievances had been addressed.4. Compliance with SEBI, Stock Exchange, and Other Regulatory Guidelines:The equity shares of Petitioner Company 1 and Petitioner Company 3 are listed on BSE and NSE, which provided 'No-Objection' letters for the Scheme. The Petitioner Companies confirmed compliance with SEBI guidelines and the necessary approval from public shareholders. Additionally, the Transferee Company undertook to comply with rules and regulations stipulated by the Luxembourg Stock Exchange and the London Stock Exchange.5. Approval and Procedural Compliance for the Scheme:The Tribunal confirmed that all requisite statutory compliances had been fulfilled. The Scheme was approved by the Board of Directors of the Petitioner Companies and received no adverse observations from the Stock Exchanges. The Tribunal directed the Petitioner Companies to file a certified copy of the order and the Scheme with the concerned Registrar of Companies and to lodge a copy with the Superintendent of Stamps for stamp duty adjudication.Conclusion:The Tribunal found the Scheme to be fair, reasonable, and not violative of any law or public policy. The Company Scheme Petition was made absolute, and the Scheme was sanctioned with the appointed date as April 1, 2019. The Petitioner Companies were directed to comply with all procedural requirements and statutory compliances as detailed in the judgment.