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of <h1>Companies' amalgamation scheme under Companies Act ss. 230-232, including appointed date and transferee name change, sanctioned.</h1> The dominant issue was whether a scheme of amalgamation under ss. 230-232 of the Companies Act, 2013 merited sanction. The Tribunal held that the scheme ... Sanction of scheme of amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme annexed as Exhibit A-I to the Company Petition appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, the petition is made absolute in terms of the prayer clauses 30 (a) to 30 (h) thereof. Further, upon the Scheme becoming effective, the name of Third Petitioner Company shall be changed to 'Gateway Distriparks Limited', subject to the filing of the relevant forms and the payment of applicable fees to the appropriate authorities in accordance with law. The Scheme is hereby sanctioned, with the Appointed Date I and 2 fixed as opening business hours of 1 April 2020 as defined under the Scheme. ISSUES PRESENTED AND CONSIDERED 1. Whether the Composite Scheme of Amalgamation complies with Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 so as to warrant sanction by the Tribunal. 2. Whether the Appointed Date(s) as defined in the Scheme (opening of business hours on 1 April 2020) may be fixed and given effect to by the Tribunal in view of Section 232(6) and related requirements. 3. Whether the consideration clauses, including nil issuance of shares for the merger of Transferor Company 1 into Transferee Company 1 and Share Exchange Ratio of 4:1 for Transferor Company 2 into Transferee Company 2, are appropriate and in conformity with applicable law. 4. Whether dissolution of transferor companies without winding up, and consequential strike-off from ROC records, is permissible under the Scheme and the Act. 5. Whether accounting treatment proposed (pooling of interests under Ind AS 103 / Appendix C for common control combinations) is acceptable and what consequences flow from capitalization of amalgamation reserves. 6. Whether statutory and regulatory compliance (service/publication of notices, filing requirements, consents of shareholders/creditors, SEBI/stock exchanges, FEMA/RBI, Income-tax, ROC observations, Competition Commission, stamp duty and fees) have been satisfied or require directions/undertakings. 7. Whether change of name of the transferee company as envisaged in the Scheme can be permitted, having regard to Companies (Incorporation) Rules, 2014 (including Rule 8) and potential for confusion. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Sanction under Sections 230-232 of the Companies Act, 2013 Legal framework: Sections 230-232 permit compromise/arrangement and merger/amalgamation subject to statutory compliances, notice to authorities, meetings (unless dispensed) and Tribunal sanction where scheme is not violative of law or public policy. Precedent treatment: No judicial precedents are referred to in the record; the Tribunal exercises statutory discretion based on compliance and material on record. Interpretation and reasoning: The Tribunal examined filings, compliance reports, absence of objections from creditors or other parties, Official Liquidator's report and the Regional Director's observations together with the Petitioner companies' affidavit responding to those observations. The Tribunal found the Scheme to be fair, reasonable, not violative of law and not contrary to public policy. Ratio vs. Obiter: Ratio - the Tribunal will sanction a scheme where statutory compliances are met, objections are absent or addressed, and material demonstrates fairness; Obiter - none specific beyond standard statements of procedural compliance. Conclusion: The Scheme is sanctioned in terms of the prayer clauses and directions issued to give effect to statutory formalities. Issue 2 - Appointed Date(s) Legal framework: Section 232(6) requires the scheme to indicate an appointed date from which it shall be effective; Tribunal has inherent powers to determine effective operation from appointed date. Precedent treatment: No precedents cited; Regional Director observed that appointed date should be clearly indicated and compliance with MCA circulars considered. Interpretation and reasoning: The Scheme explicitly defines Appointed Date 1 and Appointed Date 2 as opening of business hours on 1 April 2020. Petitioners undertook to comply with the MCA circular F. No. 7/12/2019/CL-1 dated 21.08.2019. The Tribunal fixed the appointed dates as defined in the Scheme. Ratio vs. Obiter: Ratio - Tribunal will give effect to clear appointed dates in the Scheme where compliance with related directions (e.g., MCA circular) is undertaken. Conclusion: Appointed Date I and II fixed as opening business hours of 1 April 2020. Issue 3 - Consideration clauses (including nil consideration and share exchange ratio) Legal framework: Consideration terms must be disclosed in the Scheme and be consistent with statutory and regulatory requirements, including listing rules where applicable. Precedent treatment: No precedents cited. Interpretation and reasoning: Clause for merger of Transferor Company 1 with Transferee Company 1 provides for cancellation of paid-up equity (nil fresh issuance) because Transferee Company 1 already holds entire paid-up equity of Transferor Company 1. Clause for merger of Transferor Company 2 with Transferee Company 2 specifies a 4:1 share exchange ratio. Petitioners furnished shareholder consents and undertakings regarding implementation and listing steps. The Tribunal accepted disclosures and consents as adequate to approve the consideration scheme. Ratio vs. Obiter: Ratio - where intra-group shareholdings result in nil consideration, cancellation of shares and investment entries is permissible and stamp duty consequences follow; a disclosed, agreed share exchange ratio for remaining mergers is acceptable when supported by shareholder/creditor approvals and regulatory compliance. Conclusion: Consideration provisions are approved as part of the Scheme subject to observance of related statutory and regulatory conditions (e.g., listing formalities, stamp duty adjudication). Issue 4 - Dissolution of transferor companies without winding up Legal framework: Schemes may provide for dissolution of transferor companies without winding up upon effectiveness, with consequent record-keeping and authorized actions by transferee directors to resolve residual matters. Precedent treatment: Not referenced. Interpretation and reasoning: Scheme provides automatic dissolution on Effective Date and authorizes transferee boards to take necessary post-effective steps. Petitioners undertook to comply with Section 232(3)(i) regarding set-off of fees on authorized capital and other statutory requirements. No objections were raised by Official Liquidator. Ratio vs. Obiter: Ratio - automatic dissolution under a sanctioned scheme is permissible where statutory directions (filings, set-offs, authorization to resolve residual issues) are provided and there is no contrary evidence regarding mala fide conduct. Conclusion: Dissolutions contemplated by the Scheme are sanctioned subject to statutory filings and compliance. Issue 5 - Accounting treatment: Pooling of interests under Ind AS 103 (common control) Legal framework: Ind AS 103 (and Appendix C) prescribes pooling-of-interest method for business combinations of entities under common control; differences are adjusted to capital reserves and not available for distribution. Precedent treatment: Not cited. Interpretation and reasoning: Regional Director queried accounting standards compliance; Petitioners undertook to pass necessary entries and comply with Ind AS-8/other applicable standards. Both Parts C and D of the Scheme provide pooling-of-interest treatment; Petitioners confirmed that capital reserve arising from amalgamation will not be available for distribution. Ratio vs. Obiter: Ratio - pooling of interest accounting for common control amalgamations is acceptable when consistent with Ind AS; capital reserve treatment and nondistributability must be observed. Conclusion: Accounting treatment under the Scheme is accepted subject to compliance with Ind AS and the undertaking that amalgamation reserves will not be distributed. Issue 6 - Statutory and regulatory compliances (notice/publication, consents, SEBI/stock exchanges, FEMA/RBI, Income-tax, Competition Commission, ROC, stamp duty and fees) Legal framework: Section 230(5) service requirements; provisions for disclosure to regulators and compliance with sectoral/regulatory regimes (SEBI/stock exchange listing rules, FEMA/RBI, Income-tax, CCI as applicable); ROC filings and stamp duty adjudication. Precedent treatment: Not cited. Interpretation and reasoning: Petitioners represented compliance with notice and publication requirements, obtained shareholder and secured creditor consents (meetings dispensed for certain entities as permitted), and filed compliance reports. SEBI/stock exchanges had provided observations/no objection letters; petitioners undertook to comply with listing formalities post-sanction. Petitioners undertook compliance with FEMA/RBI/Section 55 where applicable. Petitioners asserted no CCI NOC required; Income-tax issues were addressed by notices/clarifications and undertakings that dues, if any, will be met by transferee company as per law. Petitioners undertook to pay stamp duty as per adjudication and to set off fees on authorised capital under Section 232(3)(i). Regional Director's observations were either addressed by undertakings or left to the Tribunal's direction; Official Liquidator raised no objection. Ratio vs. Obiter: Ratio - Tribunal will sanction scheme where statutory/regulatory requirements are met or adequately addressed by undertakings and where authorities have been notified and afforded opportunity to be heard; Obiter - specific regulatory approvals (e.g., CCI) are assessed on facts and may not be universally required. Conclusion: Petitioners have complied with statutory/regulatory requirements or furnished undertakings; Tribunal directed further filings (ROC, stamp adjudication) and permitted authorities to act on authenticated order. Issue 7 - Change of name of the transferee company Legal framework: Sections 13 and 14 of the Companies Act and Companies (Incorporation) Rules, 2014 govern change of name; Rule 8 restricts immediate reuse of released name for three years unless direction provided in course of compromise/arrangement. Precedent treatment: None cited; Regional Director raised concern about potential confusion and Rule 8; petitioners relied on Tribunal's power in merger context. Interpretation and reasoning: Regional Director objected to proposed change of name to the name of a transferor company and highlighted Rule 8's restriction to avoid public/regulatory confusion. Petitioners submitted Tribunal has power to permit name change in the course of sanctioning a scheme where justified, and shareholders of transferee had consented. Tribunal noted the issue in Regional Director's report and Petitioners' undertakings to comply with procedural requirements. The Tribunal sanctioned the Scheme and directed that name change shall take effect upon filing requisite forms and payment of fees, thereby accepting the change subject to statutory procedural compliance. Ratio vs. Obiter: Ratio - Tribunal may permit change of transferee's name pursuant to a sanctioned scheme where statutory forms/fees are filed and appropriate approvals/filings are completed; Obiter - concerns about potential public/regulatory confusion should be addressed by procedural compliance and continuity of records. Conclusion: Change of name of the transferee company is sanctioned subject to filing of relevant forms and payment of applicable fees with appropriate authorities in accordance with law. General Directions and Conclusions The Tribunal found the Scheme fair and reasonable, made the Company Petition absolute, sanctioned the Scheme with appointed dates fixed, and directed filing of certified order and Scheme with ROC, lodging authenticated copy for stamp adjudication, and compliance by regulatory authorities. The Tribunal left liberty to interested persons and authorities to apply for further directions or clarifications.
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