2021 (1) TMI 349 - Tri - Companies Law

Approval of Scheme of Arrangement - Sections 230 to 232 read with Section 234 and other applicable provisions of the Companies Act 2013 read with The Companies (Compromises Arrangements and Amalgamations) Rules 2016 - HELD THAT - Directions regarding holding and convening of various meetings issued - various directions with regard to issuance of notices for the meetings also issued. The scheme is approved - Application allowed.

Summary

Issues Involved:
1. Jurisdiction and authority to approve the Scheme of Arrangement.
2. Compliance with statutory requirements and regulatory approvals.
3. Dispensation of meetings for equity shareholders and creditors.
4. Benefits of the amalgamation.
5. Procedural directions for convening meetings.

Issue-wise Detailed Analysis:

1. Jurisdiction and Authority to Approve the Scheme of Arrangement:
The application was filed under Sections 230 to 232 read with Section 234 and other applicable provisions of the Companies Act, 2013, and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The registered office of the Applicant Company is situated in Gujarat, thus falling under the jurisdiction of the National Company Law Tribunal (NCLT), Ahmedabad Bench.

2. Compliance with Statutory Requirements and Regulatory Approvals:
The Scheme involves the amalgamation of Sun Pharma Global FZE (Transferor Company) with Sun Pharmaceutical Industries Limited (Applicant Transferee Company). The Transferor Company, based in UAE, is an indirect wholly-owned subsidiary of the Transferee Company. The Scheme does not envisage any consideration for the transfer of the undertaking. Compliance with Section 234 of the Companies Act and the Foreign Exchange Management (Cross Border Merger) Regulations 2018 issued by the RBI was confirmed, with a certificate from the Whole Time Director and Company Secretary placed on record. The Scheme was submitted to BSE and NSE for disclosure purposes, not requiring prior approval due to the wholly-owned subsidiary status.

3. Dispensation of Meetings for Equity Shareholders and Creditors:
The Applicant sought to dispense with the meetings of equity shareholders and unsecured creditors. It was submitted that the Transferee Company has over 6 lakh equity shareholders and around 4000 unsecured creditors. The sole secured creditor had already approved the Scheme. However, the Tribunal directed convening meetings for equity shareholders and unsecured creditors through video conferencing due to the pandemic. The meeting of the sole secured creditor was dispensed with based on written consent.

4. Benefits of the Amalgamation:
The amalgamation is expected to:
- Integrate business operations and provide impetus to the Transferee Company’s operations.
- Enhance product portfolio and market access, benefiting customers and patients.
- Optimize the corporate holding structure.
- Result in cost savings due to similar business activities.
- Reduce legal and regulatory compliance multiplicity.
- Benefit shareholders, employees, and other stakeholders through smooth integration.

5. Procedural Directions for Convening Meetings:
The Tribunal provided detailed procedural directions:
- Meetings of equity shareholders and unsecured creditors to be held on 16th March 2021 via video conferencing.
- Notices to be sent at least one month before the meetings, including the Scheme of Arrangement, Explanatory Statement, and other requisite documents.
- Voting through remote e-voting and e-voting at the time of meetings.
- Advertisement of meetings in specified newspapers.
- Appointment of Chairman and Scrutinizer for the meetings.
- Compliance with Section 103 of the Companies Act, 2013, regarding quorum.
- Reporting of meeting results to the Tribunal within 30 days.

Conclusion:
The Tribunal, after considering the submissions and documents, directed the convening of meetings for equity shareholders and unsecured creditors while dispensing with the meeting of the sole secured creditor. The detailed procedural directions ensure compliance with statutory requirements and facilitate the approval process for the Scheme of Arrangement.