2022 (4) TMI 211 - Tri - Companies Law

Tribunal approves Amalgamation Scheme for Swastika Marketing & Clifton Business

The Tribunal sanctioned the Scheme of Amalgamation between Swastika Marketing Private Limited and Clifton Business Private Limited, ensuring compliance ... Sanction of Scheme of Amalgamation under Section 230 read with Section 232 - Transfer and vesting of assets and liabilities with effect from the Appointed Date - Allotment of shares by Transferee Company in consideration of amalgamation - Dissolution of Transferor Company without winding up upon filing of certified copy - Continuation of pending proceedings by or against Transferee Company - Compliance with accounting treatment and applicable accounting standards in relation to scheme - Payment of applicable stamp duty on transfer of immovable properties pursuant to amalgamation - Filing of Schedule of Assets in prescribed form and related post-sanction formalitiesSanction of Scheme of Amalgamation under Section 230 read with Section 232 - Transfer and vesting of assets and liabilities with effect from the Appointed Date - Sanction of the Scheme of Amalgamation and legal effect of the Appointed Date - HELD THAT: - The Tribunal examined the petition, statutory notices, advertisements and representations and concluded that the Scheme of Amalgamation between the Transferor Company and the Transferee Company is bona fide and in the interests of all concerned. The Scheme is sanctioned to be binding with effect from the Appointed Date stated in the Scheme. Pursuant to the sanction, all property, rights, powers, debts, liabilities, duties and obligations of the Transferor Company stand transferred to and vest in the Transferee Company from the Appointed Date without further act or deed, subject to existing charges and as provided in the Scheme. [Paras 1, 4, 8]The Scheme is sanctioned and assets and liabilities of the Transferor Company are transferred and vested in the Transferee Company with effect from the Appointed Date.Allotment of shares by Transferee Company in consideration of amalgamation - Continuation of pending proceedings by or against Transferee Company - Engagement of employees of Transferor Company by Transferee Company - Post-sanction operational consequences as provided in the Scheme - HELD THAT: - The Tribunal directed that the Transferee Company shall, without further application, issue and allot to the shareholders of the Transferor Company the shares to which they are entitled under the Scheme. It was directed that employees of the Transferor Company shall be engaged by the Transferee Company as provided in the Scheme. Further, all proceedings, suits and appeals pending by or against the Transferor Company shall be continued by or against the Transferee Company in accordance with the Scheme. [Paras 8]The Transferee Company shall effect the allotment of shares, engage the Transferor Company's employees as per the Scheme, and continue pending proceedings as the Transferee Company.Dissolution of Transferor Company without winding up upon filing of certified copy - Filing of Schedule of Assets in prescribed form and related post-sanction formalities - Procedural steps to be taken consequent to sanction including filing and dissolution - HELD THAT: - The Tribunal granted leave to file the Schedule of Assets in the form prescribed in Form No. CAA7 within a stipulated time and directed that each company shall within thirty days cause a certified copy of the order to be delivered to the Registrar of Companies for registration. Upon filing of certified copies, the Transferor Company shall be dissolved without winding up with effect from the date of filing of the certified copy and Registrar shall consolidate files as prescribed. The Petitioners were also directed to supply legible printouts of the scheme and schedule for departmental appendage to certified copy upon verification. [Paras 8, 9]Petitioners to file the Schedule of Assets and deliver certified copies to the Registrar; Transferor Company to be dissolved without winding up upon filing.Compliance with accounting treatment and applicable accounting standards in relation to scheme - Payment of applicable stamp duty on transfer of immovable properties pursuant to amalgamation - Acceptance of undertakings given in response to Regional Director's observations regarding accounting and stamp duty - HELD THAT: - The Regional Director raised points seeking undertakings on compliance with the requirement of section 232(3)(i), payment of applicable stamp duty on transfer of immovable properties, and passing of necessary accounting entries to comply with applicable accounting standards. The Petitioners, by rejoinder, affirmed that they will comply with section 232(3)(i), will pay applicable stamp duty consequent to approval of the Scheme, and will pass such accounting entries as may be necessary to comply with applicable Accounting Standards. The Tribunal, having considered the RD's observations and the Petitioners' undertakings, proceeded to allow the petition. [Paras 7, 8]Petitioners' undertakings on statutory compliance, stamp duty and accounting treatment accepted and recorded; petition allowed.Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation to be effective from the Appointed Date, directed transfer and vesting of assets and liabilities in the Transferee Company, ordered implementation steps including allotment of shares, engagement of employees, continuation of proceedings, filing of the Schedule of Assets and delivery of certified copies to the Registrar leading to dissolution of the Transferor Company, and recorded acceptance of the Petitioners' undertakings on accounting and stamp duty compliance. Issues Involved:1. Sanction of the Scheme of Amalgamation under Section 230 read with Section 232 of the Companies Act, 2013.2. Compliance with statutory requirements and accounting standards.3. Observations and conditions imposed by the Regional Director and the Official Liquidator.4. Directions regarding the transfer of properties, liabilities, and employees.5. Issuance and allotment of shares to shareholders of the Transferor Company.Issue-Wise Detailed Analysis:1. Sanction of the Scheme of Amalgamation:The petition was filed for the sanction of the Scheme of Amalgamation of Swastika Marketing Private Limited (Transferor Company) with Clifton Business Private Limited (Transferee Company) from the Appointed Date, April 1, 2019. The Scheme was approved unanimously by the Board of Directors of both companies on September 2, 2019. The amalgamation aimed at consolidating business, optimizing synergies, efficient utilization of capital, better administrative control, cost efficiency, leveraging combined assets, and improved organizational capability.2. Compliance with Statutory Requirements and Accounting Standards:The Statutory Auditors confirmed that the accounting treatment in the Scheme is in conformity with the accounting standards prescribed under Section 133 of the Companies Act, 2013. Additionally, there were no pending proceedings under Sections 210 to 227 of the Companies Act, 2013 against the Petitioners. The exchange ratio of shares was fixed on a fair and reasonable basis by a Registered Valuer. The shares of the Petitioner Companies were not listed on any stock exchanges.3. Observations and Conditions Imposed by the Regional Director and the Official Liquidator:The Official Liquidator concluded that the affairs of the Transferor Company were not conducted prejudicially to the interest of its members or public interest. The Regional Director's observations included compliance with section 232(3)(i) of the Companies Act, 2013, payment of applicable stamp duty on the transfer of immovable properties, passing necessary accounting entries, approval by the requisite majority of members and creditors, ensuring no discrepancy in the Scheme, and serving notices to concerned authorities. The Petitioners provided appropriate affirmations and undertakings in response to these observations.4. Directions Regarding the Transfer of Properties, Liabilities, and Employees:The Tribunal ordered that all property, rights, and powers of the Transferor Company be transferred to the Transferee Company without further act or deed, pursuant to Section 232(4) of the Companies Act, 2013. Similarly, all debts, liabilities, duties, and obligations of the Transferor Company were transferred to the Transferee Company. The employees of the Transferor Company were to be engaged by the Transferee Company. All pending proceedings by or against the Transferor Company were to continue by or against the Transferee Company.5. Issuance and Allotment of Shares to Shareholders of the Transferor Company:The Tribunal directed the Transferee Company to issue and allot shares to the shareholders of the Transferor Company as per the terms of the Scheme. The Petitioner(s) were granted leave to file the Schedule of Assets of the Transferor Company within three weeks. The Transferor Company and the Transferee Company were to deliver certified copies of the order to the Registrar of Companies within thirty days, leading to the dissolution of the Transferor Company without winding up.Conclusion:The Tribunal sanctioned the Scheme of Amalgamation, ensuring compliance with all statutory requirements and addressing the observations of the Regional Director and the Official Liquidator. The Scheme was deemed to be in the interest of all concerned, leading to the consolidation of business and improved operational efficiency. The petition was disposed of accordingly, with directions for the supply of certified copies of the order.