Scheme sanction for demerger and amalgamation upheld where stakeholder interests, accounting compliance and capital adjustments were found proper.

A scheme of arrangement involving demerger, amalgamation and consequential share capital adjustments was sanctioned under the Companies Act, 2013 because it had Board approval, statutory compliance was stated, and no objection was raised by the Regional Director or Official Liquidator. The Tribunal found the scheme fair, reasonable, protective of stakeholder interests, and not contrary to public policy or any provision of law. The accounting treatment was certified as compliant with applicable standards, and the capital reduction component was treated as integral to the arrangement rather than requiring a separate procedure. The scheme was made binding on the shareholders, creditors and employees of the companies concerned.

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Issues: Whether the proposed scheme of arrangement comprising demerger, amalgamation and consequential share capital adjustments deserved sanction under the Companies Act, 2013.

Analysis: The Scheme was approved by the Boards of the concerned companies, the statutory requirements were stated to have been complied with, and no objection was raised by the Regional Director or the Official Liquidator. The Scheme was found to protect stakeholder interests, to be fair and reasonable, and not contrary to public policy or any provision of law. The accounting treatment was certified to be in conformity with the applicable accounting standards, and the capital reduction contemplated as part of the Scheme was treated as integral to the arrangement rather than requiring a separate procedure.

Conclusion: The Scheme was sanctioned and made binding on the shareholders, creditors and employees of the companies concerned.

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