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2017 (2) TMI 1131 - HC - Companies LawScheme of Demerger allowed - Board of Directors of Applicant Company-I Applicant Company-IV and the Applicant Company-V in their separate meetings held on 28.07.2016; and the Board of Directors Applicant Company-II and Applicant Company-III in their separate meetings held on 27.07.2016 have approved the proposed scheme. Rest all the requirement of convening the meetings accordingly convened.
Issues Involved:
1. Jurisdiction and incorporation details of Applicant Companies. 2. Share capital structure of Applicant Companies. 3. Approval of proposed scheme by Board of Directors. 4. Benefits of the proposed scheme. 5. Share exchange ratio. 6. Consent/NOCs from equity shareholders, secured creditors, and unsecured creditors. 7. Dispensation of meetings for approval of the proposed scheme. Issue-wise Detailed Analysis: 1. Jurisdiction and Incorporation Details of Applicant Companies: The registered offices of all Applicant Companies are situated within the National Capital Territory of Delhi, thus falling under the jurisdiction of this Court. Each company was duly incorporated under the Companies Act, with specific dates and names provided for each. 2. Share Capital Structure of Applicant Companies: The authorized and issued share capital structures as of 31.03.2016 for each Applicant Company were detailed. For instance, Applicant Company-I had an authorized share capital of Rs. 50,00,000/- divided into 50,000 equity shares of Rs. 100/- each, and an issued, subscribed, and paid-up share capital of Rs. 35,00,000/- divided into 35,000 equity shares of Rs. 100/- each. 3. Approval of Proposed Scheme by Board of Directors: The Board of Directors of Applicant Companies I, IV, and V approved the proposed scheme in meetings held on 28.07.2016, while Companies II and III approved it on 27.07.2016. Copies of the resolutions passed at these meetings were placed on record. 4. Benefits of the Proposed Scheme: The proposed scheme aims to demerge the Demerged Undertaking of Applicant Company-I into Applicant Company-IV, allowing focused strategy in operations and unlocking significant value for shareholders. The amalgamation of Transferor Companies (I, II, III) with the Transferee Company aims to consolidate related businesses, bring cost synergies, and improve financial ratios, thereby presenting a healthier balance sheet. 5. Share Exchange Ratio: The Resulting Company/Applicant Company-IV shall issue 10,000 equity shares of Rs. 10/- each fully paid-up to the equity shareholders of the Demerged Company/Applicant Company-I. Additionally, the Transferee Company will issue shares to the shareholders of Transferor Companies based on specified ratios, such as 69 equity shares of Re. 1/- for every 20 equity shares of Rs. 100/- held by shareholders of Transferor Company-I. 6. Consent/NOCs from Equity Shareholders, Secured Creditors, and Unsecured Creditors: - Equity Shareholders: Written consents/NOCs were obtained from all equity shareholders of each Applicant Company, thus dispensing the requirement of convening meetings. - Secured Creditors: Since some Applicant Companies had no secured creditors, the question of convening meetings did not arise. For those with secured creditors, written consents/NOCs were obtained. - Unsecured Creditors: Written consents/NOCs were obtained from the majority of unsecured creditors. For remaining creditors, certificates from Chartered Accountants confirmed that debts were paid off, thus dispensing the requirement of convening meetings. 7. Dispensation of Meetings for Approval of the Proposed Scheme: Based on the consents/NOCs obtained and the Chartered Accountants' certificates, the Court dispensed with the requirement of convening meetings of equity shareholders, secured creditors, and unsecured creditors to consider and approve the proposed scheme. Conclusion: The application was allowed, and the requirement of convening meetings for approval of the proposed scheme was dispensed with, based on the consents/NOCs obtained and the Chartered Accountants' certifications regarding debt payments. The judgment facilitated the demerger and amalgamation processes as proposed by the Applicant Companies.
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