1. Under consideration are the Company Petition Nos. 233 & 234/CAA/2019 filed under Sections 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. As per the Scheme of Amalgamation (in Short, ‘Scheme’), M/s. Midas Safety Products Private Limited (hereafter referred to as ‘Transferor Company’) is proposed to be merged, amalgamated and vested with M/s. Midas Safety Private Limited (hereafter referred to as ‘Transferee Company’) as a going concern.
2. The Transferor Company is a Private Limited Company, having its Registered Office at 2/31A, Thennampalayam, Annur Road, Arasur, Coimbatore - 641 407, Tamil Nadu. The Transferee Company is a Private Limited Company, having its Registered Office at Plot No. B-45, SIPCOT Industrial Park, Thandalam, Sriperumbudur, Kancheepuram - 602 105, Tamil Nadu. The Transferor Company is carrying on the business as manufacturers, fabricators, exporters, importers, traders, distributers, agent, commission agent, assemblers, stockiest, marketing mediators, indenters of and all types, kind and description of dress, etc. The details of the main objects are elaborately set out in the Memorandum of Association of the Transferor Company. The Transferee Company is engaged in the business as manufacturers, fabricators, exporters, importers, traders, distributers, agent, commission agent, assemblers, stockiest, marketing mediators, indenters of and all types, kind and description of dress, etc. The details of the main objects are elaborately set out in the Memorandum of Association of the Transferee Company. The Board of Directors of the Transferor and Transferee Companies have approved the said Scheme, vide their Resolution(s) dated 14.03.2018.
3. This Bench vide Order dated 24.08.2018, in CAs/141 & 142/CAA/2018 dispensed with convening, holding and conducting of the meeting of the Equity Shareholders, Secured/Unsecured Creditors of both the Transferor and Transferee Companies. In short the Petitioner Companies have complied with all the requirements of law.
4. The representative appearing for the Petitioner Companies has submitted that the rationale and circumstances that have necessitated the proposed Scheme are that the amalgamation will enable greater integration, financial strength and flexibility for the amalgamated entity which will facilitate in focussed growth, operational efficiencies, business synergies and better supervision of the business of the group and pooling of resources of the Transferor Company with the resources of the Transferee Company to their advantage, resulting in more productive utilisation of resources. He has further submitted that no investigation proceedings are pending against the Companies under Sections 235 to 251 of the Companies Act, 1956 or corresponding provisions of the Companies Act, 2013.
5. The Regional Director, Southern Region (In short, ‘RD’) in his Affidavit dated 09.01.2019 submitted that Clause 7 of part III of the Scheme provide for the protection of the interest of the executives/employees/ staffs/workmen of the Transferor Company. It has further been submitted that as per the report of the RoC, Chennai and Coimbatore, the Transferor and Transferee Companies are regular in filing their statutory returns, and no complaints are pending and no inspection or investigation has been conducted against the Petitioner Companies.
6. The RD in Para 9 of his Affidavit has observed that Clause 11.1 of Part-III of the Scheme has stated that the authorised capital of the Transferor Company will be merged with the authorised capital of the Transferee Company. Therefore, the Transferee Company may be directed to file the amended MoA and AoA with the RoC, Chennai for records.
7. The RD further observed that in the said Clause of the Scheme of the Companies have stated that the Transferee Company would not be required to pay any fee or stamp duty for the increase of the authorised capital. He has mentioned that as provided under Clause (i) to Sub Section (3) of Section 232 of the Companies Act, 2013, the Transferee Company has to pay the fees, if any, for the enhanced authorised capital subsequent to the amalgamation after setting off the fees paid by the Transferor Company. He has suggested that the Transferee Company may be directed to comply with the provisions of the Act, by making an application with the RoC, Chennai, for payment of the balance fee as applicable under the provisions of the Act and Rules framed thereunder. The RD has not raised any other objection except the above observations.
8. In relation to the observation(s) made by the RD in his report, the authorised person of the Transferee Company has filed an Undertaking stating therein that the Transferee Company undertakes to file the amended MoA and AoA with the concerned RoC, and to pay the requisite statutory fee payable upon increase of the authorised share capital of the Transferee Company as per the applicable legal provisions. Accordingly, the Transferee Company shall amend the MoA and AoA and file the same with the concerned RoC, and shall pay fee as may be required.
9. The Official Liquidator (In short, ‘OL’) in his Report dated 20.12.2018, submitted that on receiving the copy of the Order, he has nominated Mr. N.Venkatesan, Chartered Accountants (Auditor), Coimbatore, who is one of the empanelled Auditors by the Hon’ble High Court of Madras, to look into the Scheme of Amalgamation and to scrutinize the books of accounts of the Transferor Company. The Auditor has broadly reviewed and observed that under Clause 7.1 of Part-III of the proposed Scheme, the interest of all the executives, staffs, workmen and other employees in the service of the Transferor Company is safeguarded.
10. The OL has further submitted that the Chartered Accountants have observed that the Transferor Company has filed the Income Tax returns for the respective period i.e., for the Assessment Years 2015-2016, 2016-2017 and 2017-2018. Further, that on verification of the status of return filed by the Transferor Company from the Income Tax Portal it appears that the case is transferred to the Assessing Officer for the Assessment Years 2013-2014 and 20142015. It is informed to them that the scrutiny has been completed for the Assessment Year 2014-2015. For the Assessment Year 2013-2014 the scrutiny assessment have been completed but the Transferor Company has filed Appeal against the order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961. However, any liability arising on the Scheme becoming effective will be borne by the Transferee Company under Clause 14 of the Scheme of Amalgamation.
11. The OL has also submitted that the Chartered Accountants have examined the Books of Accounts related vouchers, other pertinent documents, Annual Reports, statutory books and registers of the Transferor Company, and the affairs of the Transferor Company have not been conducted in a manner which is prejudicial to the interest of its members, or their creditors, or to the public, nor were there any transactions which would/may attract the provisions of Sections 542/543 of the Companies Act, 1956, and other relevant Sections of the Companies Act, 2013.
12. As mentioned in Clause 13 of the Scheme, it appears that the Accounting Treatment is in conformity with the Accounting Standards.
13. There is no additional requirement for any modification and the said Scheme appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Sections 230 to 232 of the Companies Act, 2013. Taking into consideration the above facts, the Company Petitions are allowed and the Scheme annexed with the Petitions is hereby sanctioned which shall be binding on the Shareholders, Creditors and employees of the Petitioner Companies. The Appointed Date is 1st April, 2017, as mentioned in the Scheme.
14. While approving the Scheme as above, it is clarified that this Order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable, as per the relevant provisions of law or from any applicable pei missions that may have to be obtained or, even compliances that may have to be made as per the mandate of law.
15. The Companies to the said Scheme or other person(s) interested shall be at liberty to apply to this Bench for any direction that may be necessary with regard to the working of the said Scheme.
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A certified copy of this Order shall be filed with the concerned Registrar of Companies within 30 days of the receipt of this Order. 17. The Transferor Company shall be dissolved without winding up from the date of the filing of the certified copy of this Order with the concerned Registrar of Companies. 18. Upon receiving the certified copy of this Order, the RoC concerned is directed to place all documents relating to the Transferor Company with that of the Transferee Company, and the files relating to the Transferor Company shall be consolidated with the files and records of the Transferee Company. 19. The Order of sanction to this Scheme shall be prepared by the Registry as per the relevant format provided under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, notified on 14th December, 2016. 20. Accordingly, the Scheme stands sanctioned and CPs/233 & 234/CAA/2019 stand disposed of.