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TMI Blog2022 (3) TMI 1526X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Limited ('Petitioner Company No. 1'/ 'Transferor Company') and TML Business Services Limited ('Petitioner Company No. 2'/'Transferee Company') and their respective shareholders ('Scheme'). 4. The Board of Directors of Petitioner Company No. 1 and Petitioner Company No. 2 have approved the said Scheme by passing the Board Resolutions dated 30th September 2021 which are annexed to the respective Company Scheme Petition and thereafter, they have approached this Tribunal for sanction of the Scheme. 5. The Learned Advocate appearing on behalf of the Petitioner Companies states that the Petition has been filed in consonance with the Order passed in the Company Scheme Application No. C.A(CAA)/255/MB-V of 2021 of the National Company Law Tribunal, Mumbai Bench ("Hon'ble Tribunal"). 6. The Learned Advocate appearing on behalf of the Petitioner Companies further states that the Petitioner Companies have complied with all requirements as per directions of the Hon'ble Tribunal and they have filed necessary affidavits of compliance with Hon'ble Tribunal on February 15, 2022. 7. The Learned Counsel for the Petitioner Companies states that the Petitioner Company No 1 is engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consolidation of the Petitioner Company No. 1 into the Petitioner Company No. 2 pursuant to the Scheme will result in a reduction in the number of corporate entities in the Group thereby leading to simplification of the Group structure, reduce monitoring and corporate compliances and other administration work, provide a common governance structure, thereby enhancing shareholder value, realizing operational synergies, increasing operational efficiency and integrating business functions, iii. the Petitioner Company No. 1 being smaller in terms of operations and manpower, it would commercially be less disruptive to move Petitioner Company No. 1 business to the Petitioner Company No. 2, iv. consolidation of the respective businesses of the Petitioner Company No. 1 and the Petitioner Company No. 2 to ensure more focused operational efforts, reduce overhead expenses and align with the business plans which will enable to meet the long-term objectives of the Group, v. the amalgamation of the Petitioner Company No. 1 with the Petitioner Company No. 2 will reduce time, efforts and expense in consolidating the financials at the Group level (including audit), vi. pursuant to the amalg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny No. 1 as a going concern into and with the Petitioner Company No. 2 pursuant to the provisions of Section 230 to Section 232 and other relevant provisions of the Act. 9. The Regional Director has filed his Report dated 14th day of February 2022 ("RD Report") inter-alia making the following observations in Paragraphs IV (a) to (i) which are reproduced hereunder: Para Observation by the Regional Director Undertaking of the Petitioner Company/ Rejoinder IV(a) In compliance of AS-14 (IND AS103), the Petitioner Companies 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 AS8) etc. So far as the observation in paragraph IV (a) of the Report is concerned, the Learned Counsel for the Petitioner Companies submits that the Petitioner undertakes that in addition to Compliance of AS-14 (IND AS103), the Petitioner Companies 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 IV(b) The Petitioners under provisions of section 230(5) of the Companies Act, 2013 have to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Affairs. So far as the observation in paragraph IV (d) of the Report is concerned, the Learned Counsel for the Petitioner Companies submits that the Appointed Date is 1st April, 2021 from which it shall be effective and the scheme shall be deemed to be effective from such date. The Petitioner Companies undertakes to comply with the requirements clarified vide circular no. F. No.7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs. IV (e) Petitioner Companies have to undertake to comply with the section 232(3)(i) of the Companies Act, 2013, where the transferor Company is dissolved, the fee, if any, paid by the transferor company on its authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation and therefore, petitioner to affirm that they comply the provisions of the section. So far as the observation in paragraph IV (e) of the Report is concerned, the Learned Counsel for the Petitioner Companies submits that the Petitioner Companies undertakes to comply with the provisions of section 232(3)(i) of the Companies Act, 2013. IV (f) As per Clause 16 of the scheme, 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transferee Company shall be restated for the accounting impact of amalgamation of the Transferor Company, as stated above, as if the amalgamation of the Transferor Company had occurred from the beginning of the comparative period in the financial statements. Petitioner Companies have to undertake that the surplus shall be credited to Capital Reserve Accounts arising out of the Amalgamated Company deficit shall be debited to Goodwill Account. Further Petitioner Companies have to undertake that reserves shall not be available for distribution of dividend. So far as the observation in paragraph IV (f) of the Report is concerned, the Learned Counsel for the Petitioner Companies submits that the Petitioner Companies undertakes to abide by the Indian Accounting Standards for giving effect to the transfer as contemplated in the Scheme and comply with the accounting treatment mentioned above. The Learned Counsel for the Petitioner Companies further submits that the Petitioner Company undertakes that the difference, between the equity share capital issued by the Transferee Company under clause 16.2 (iv) of the Scheme and the carrying value of all the assets, liabilities and exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Company will be transferred to the Transferee Company. IV (i)(ii) ii. Interest of creditors should be protected. So far as the observation in paragraph IV i(ii) of the Report of the Regional Director is concerned, the Learned Counsel for the Petitioner Companies submits this interest of creditors will be protected. 10. The observations made by the Regional Director have been explained by the Petitioner Companies in Para 9 above. Thereafter, the Petitioner Company No.2 had filed their Rejoinder Affidavit to the observation of RD Report on 22nd day of February 2022. The Representative of the RD has filed his Supplementary Report dated 3rd day of March 2022 confirming that the explanations and clarifications given by the Petitioner Companies are found satisfactory and that they have no objection to the Scheme. 11. The Official Liquidator has filed his report on 28th day of February 2022 in the Company Scheme Application No. 255 of 2021, inter alia, stating therein that the affairs of the Transferor Company have been conducted in a proper manner not prejudicial to the interest of the members or the public interest of the Transferor Company and that the Transferor Company may be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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