TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 18
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....ransferor company/petitioner-company I), Ag-Vet Genetics P. Ltd. (transferor company/petitioner-company II) with Baramati Agro Ltd. (the transferee company/petitioner-company III) and their respective share- holders. 4. Counsel for the petitioners state that the petitioner-company I is presently engaged in the business of logistics and transportation, petitioner- company II is engaged in the business of buying, selling, and dealing in poultry, seeds and agricultural products and the petitioner-company III is engaged in the business of farming, agriculture, horticulture dairy, poultry, sugar and farm produce and other allied activities. 5. Learned counsel for the petitioner-companies states that the petitioner- companies believe that the amalgamation would benefit them and its stakeholders on account of following reasons : (i) Transferor company I and II have certain assets/business which include land at certain convenient location and are specialized transport vehicles used in transport services and has related infrastructures. The proposed merger will create a synergy to transferor as well as transferee which will enable these business activities to sustain as well as grow at ....
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....ate that the joint petition has been filed in consonance with the order dated June 11, 2020 passed by the National Company Law Tribunal, Mumbai Bench in the company application bearing C. A. (C. A. A.) No. 1067/MB/2019. 8. Learned counsel appearing on behalf of the petitioner-companies further states that the petitioner-companies have complied with all requirements as per directions of this Tribunal and they have filed necessary affidavits of compliance. Moreover, the petitioner-companies undertake to comply with all the statutory requirements if any, as required under the Companies Act, 2013 and the Rules made thereunder whichever is applicable. The said undertaking is accepted. 9. The Regional Director has filed a report dated December 9, 2020 based on the report issued by Registrar of Companies, Pune, stating therein, save and except as stated in paragraph IV, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraph IV of the said report, the Regional Director has stated that : (IV) The observations of the Regional Director on the proposed scheme to be considered by the hon'ble NCLT are as under : (a) In compliance of AS-14....
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....under examination. (f) The Registrar of Companies, Pune vide report dated October 14, 2020 has, inter alia, mentioned below : (i) As stated in paragraph 9 above, the part D of the petition contains conversion of equity shares into preference shares which is not permissible to issue redeemable preference shares against existing equity shares as its value, terms, rights are different and cannot be terms as same kinds of shares to exchange in ratio for consideration. Further, Ministry vide letter No. 03/08/2019-CL-V, dated July 27, 2020 has stated that one litigation in on going w.r.t. conversion of equity shares into preference shares and vice versa whereby reclassification of such type was rejected by the Registrar of Companies, Delhi and has also asked for comments on the conversion of equity shares into preference shares or vice versa. It is sub mitted that the equity shareholders are having rights different to that of the preference shareholders which include voting rights. Further, the instant scheme is placed before member of the transferee company having only 48.45 per cent. of value which is not representing majority. Hence such conversion many be considered undesirable. ....
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.... compliance of AS-14 (IND AS-103), the transferee company shall pass such accounting entries, which are necessary in connection with the scheme to comply with other applicable Accounting Standards such as AS-5 (IND-AS-8), etc., to the extent applicable. (b) Apropos the observations made in paragraph IV(b) of the report of Regional Director is concerned, the petitioner-companies undertake and confirm that, the scheme shall be operative with effect from April 1, 2018 as mentioned in the scheme. Accordingly, the effective date is not in contravention with the provisions of section 232(6) of the Companies Act, 2013. It is further undertaken that the petitioner-companies will comply with the requirements and clarifications issued vide Circular No. 7/12/2019/ CL-1, dated August 21, 2019 issued by the Ministry of Corporate Affairs. (c) Apropos observations made in paragraph IV(c) of the report of the Regional Director are concerned, the transferee company undertakes that the authorized share capital of transferor companies shall be merged with that of the transferee company in accordance with the provision of section 232(3)(i) of the Companies Act, 2013. (d) Apropos observations mad....
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....d preference and combination of two depict the total share capital. When shares of one class are converted into another class (for instance, equity shares into preference or vice versa) and value of the paid-up share capital does not undergo any change, the subscribed and paid-up capital remains unchanged ; only the nomenclature of shares undergo change. (ii) Section 230 of the Companies Act, 2013 ("the Act") contains provisions concerning compromise or make arrangements with creditors and members. According to sub-section (1) of section 230, where a com promise or arrangement is proposed- (a) between a company and its creditors or any class of them ; or (b) between a company and its members or any class of them, (iii) Under section 230 of the Act, a scheme of compromise or arrangement may be in the form of reorganization of share capital of a company and the Explanation appended to sub-section (1) gives an inclusive definition of the expression "arrangement" as including "reorganization of share capital". When a word is defined to "mean" something, the definition is prima facie restrictive and exhaustive, whereas, where the word defined is declare....
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....lves a restructuring of the capital of the company-as in a case where the rights of the various shareholders are sought to be altered-it can also be said that under the existing memorandum and articles of association of the company, the rights of the share holders are fixed in a certain way and to change them would involve sanctioning an act which is ultra vires the memorandum and articles of association. Strictly speaking, such an act may be considered as ultra vires. But, in fact, the very purpose of a scheme of reconstruction is to make suit able alterations in the structure of the company to enable it to function. A scheme, therefore, which contains such ultra vires provisions can be sanctioned, and is in fact, sanctioned in a number of cases. (vi) With regard to the MCA letter refereed by the office of Registrar of Companies, Pune, viz. letter No. 03/08/2019-CL-V, dated July 27, 2020 the petitioner-companies submitted that as per the settled principle by the hon'ble Supreme Court in several cases the said letter cannot be binding on the court or Tribunal or petitioner-companies in this case unless the same are made part of substantive law or delegated legislation a....
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....site scheme of arrangement. The term arrangement in section 391 is of wide amplitude. It is defined in the Act. The corporate affair are often complex involving the interplay of innumerable factors including those relating to policy matters, management and financial aspects and legal issues. The scheme often requires considerations of various enactments and adherence to various legal provisions not only under the Companies Act but also under other enactments. Financial aspects are not limited in their nature or in scope. Each component is studied, and the resultant arrangement is arrived at after taking all of them into consideration. There are consequential acts to be performed as an integral part of the scheme. Many of them, therefore, involve other arrangements such as reduction in share capital and the amendment of the memorandum of association and the articles of association of the company. These very components can constitute one composite scheme/arrangement under section 391 of the Act. The Legislature, therefore advisedly did not restrict scope of the term arrangement by defining it. A view to the contrary would place an unwarranted fetter upon the activities of a company a....
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.... I and Reference Note No. 2.58(D) 12 for transferee company. (ii) The petitioner-companies further state that figures of "Interest on ICD received' is also matching and the same are disclosed in the financial statement of transferor company I reference Note. No. B.17(b) (A) (4) Related Party Transactions-"Interest on ICD and Note No. 2.58(D) 9 for transferee company". (iii) The petitioner-company III states that figures of "Interest on ICD received" is also matching and the same are disclosed in the financial statement of transferor company I reference Note No. B.4.1.(C)(C) "Interest payable on ICD" and Note No. 2.58(D) 10 for transferee company. (iv) The petitioner-companies state that figures of "receipt of services" is having minor difference with transfer company I, financial statement Reference Note No. B.17.(B).(A) (1) rendering of Services for transferor company I and Note No. 2.58 (D) 4 for the transferee company. The said difference is due pending reconciliation of accounts. (v) The petitioner-companies state that figures of "Reimbursement of expenses" is having minor difference with transfer company I, financial statement reference note No. B....
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....or companies and transferee company, financials are disclosing true and correct picture. 11. The Regional Director has filed its supplementary report dated December 16, 2020 taking into consideration report issued by the Registrar of Companies, Pune and stated that the petitioner-companies have replied satisfactory to paragraph IV (a) to (e) and the other matters be considered on merit. Further the Regional Director had stated in the report that the Regional Director is not convinced with the reply filed by the petitioner- companies with regard to MCA letter refereed by the Registrar of Companies, Pune, viz., letter No. 03/08/2019-CL-V, dated July 27, 2020. 12. The observations made by the Regional Director mentioned in paragraph 9 above have been explained by the petitioner-companies in paragraph 10 above. Further, the petitioner-companies have also filed affidavit in rejoinder dated December 11, 2020 to the report of Regional Director. The clarifications and undertakings given by the petitioner-companies are accepted by the Tribunal. 13. The official liquidator has filed his report dated October 8, 2020, inter alia, stating therein that the affairs of the company have not been....