Amalgamation scheme meetings can be dispensed with on requisite consent affidavits, but unsecured creditors' meetings may still be required.

In a proposed amalgamation, the tribunal accepted dispensation of meetings of equity shareholders and secured creditors because consent affidavits satisfied the statutory majority threshold, including unanimous shareholder consent in one company and over 90% secured creditor value approval in both. However, it declined to dispense with the unsecured creditors' meetings because no consent affidavits were produced for them and their liabilities remained substantial. The scheme therefore could proceed only with meetings of unsecured creditors being convened, while the other stakeholder meetings were validly dispensed with.

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Issues: (i) Whether the meetings of the equity shareholders and secured creditors of the transferor and transferee companies could be dispensed with on the basis of consent affidavits. (ii) Whether the meetings of the unsecured creditors could also be dispensed with in respect of the proposed amalgamation scheme.

Issue (i): Whether the meetings of the equity shareholders and secured creditors of the transferor and transferee companies could be dispensed with on the basis of consent affidavits.

Analysis: The scheme was supported by affidavits of all shareholders in the transferor company and by shareholders holding 95.52% in the transferee company. The secured creditors of both companies had also given consent affidavits crossing the 90% value threshold. The statutory framework permits dispensation where the requisite majority of members or creditors confirm the scheme by affidavit.

Conclusion: The meetings of the equity shareholders and secured creditors were rightly dispensed with.

Issue (ii): Whether the meetings of the unsecured creditors could also be dispensed with in respect of the proposed amalgamation scheme.

Analysis: Although the scheme contemplated transfer of assets and liabilities as a going concern, no consent affidavits were produced from the unsecured creditors. The post-scheme position showed that the liabilities to unsecured creditors were substantial and the combined net worth situation was not positive in relation to those liabilities. In these circumstances, the interests of unsecured creditors and other stakeholders required a meeting for consideration of the scheme.

Conclusion: The meetings of the unsecured creditors could not be dispensed with and were directed to be held.

Final Conclusion: The applications were allowed only to the extent of dispensing with the meetings of shareholders and secured creditors, while the unsecured creditors' meetings were required to be convened, and the matter was disposed of with consequential directions for the next stage of the amalgamation process.

Ratio Decidendi: Dispensation of meetings in a scheme of amalgamation may be granted where the statutory consent threshold is satisfied by affidavits, but it cannot be granted for unsecured creditors where their interests may be affected and the scheme does not present a sufficient safeguard for them.

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