Mergers & Amalgamations under the
Companies Act, 1956
The terms merger
and amalgamation have not been defined in the Companies Act, 1956 (hereinafter
referred to as the Act) though this voluminous piece of legislation contains 69
definitions in Section 2. The concept paper recently issued by the Ministry of
Company Affairs, the fate of which is still unknown, contained 100 such
definitions but still stopped short of defining merger or amalgamation. The
terms merger and amalgamation are synonyms and the term ‘amalgamation’,
as per Concise Oxford Dictionary, Tenth Edition, means, ‘to combine or unite
to form one organization or structure’.
The provisions
relating to merger and amalgamation are contained in sections 391 to 396A in
Chapter V of Part VI of the Act. Any proposal of amalgamation or merger begins
with the process of due diligence, as the proposal for merger without due
diligence is like entering a tunnel with darkness growing with each step. The
due diligence process makes the journey see the light at the end of the tunnel
– the light of wisdom to amalgamate or not.
The Act and the
relevant rules pertaining to amalgamation are to be followed scrupulously. The
provisions of the Act also deal with compromise or arrangement within or
without amalgamation or merger. Presently, the High Court enjoys powers of
sanctioning amalgamation matters under section 394 of the Act though it is a
matter of time when this power will be exercised by National Company Law
Tribunal, a forum where Chartered Accountants shall be authorized to appear.
Not losing sight of this opportunity coming way of the Chartered Accountants,
the seminar on this very topic, assumes greater significance and it is
imperative that professionals like Chartered Accountants should keep themselves
informed of the provisions relating to merger and amalgamations. The role of
Chartered Accountants, in any amalgamation case, cannot be undermined as
without their uncanny insight within the financial maze, no due diligence,
valuation, share exchange ratio etc. can be accomplished.
An attempt has
been made in this paper to present the provisions of the Companies Act, 1956
relating to mergers and amalgamations in form of questions and answers for ease
of understanding, insight and awareness.
1. Can a compromise
or arrangement between company and creditors and company and members be made
and whether it requires approval of the Court?
Yes, compromise or arrangement can be made between a company and its
creditors or any class of them and also between a company and its members or
any class of them. Such a compromise or arrangement requires sanction of the
court, which directs holding of meeting of creditors or members or class of
creditors or members, as the case may be. On agreement of creditors or members present
in majority representing three-fourth in value (both the conditions are
concurrent and cumulative) of creditors or members, the court may sanction
any such compromise or arrangement.
2.
What are the powers vested
in court in relation to amalgamation of two companies?
The court enjoys vast powers in relation to grant of sanction for
amalgamation of companies and can make provisions in the order, in respect of
all or any of the following matters: -
(i)
the transfer to the transferee company of the whole
or any part of the undertaking, property or liabilities of any transferor
company;
(ii)
the allotment or appropriation by the transferee
company of any shares, debentures, policies, or other like interests in that
company which, under the compromise or arrangement are to be allotted or
appropriated by that company to or for any person;
(iii)
the continuation by or against the transferee
company of any legal proceedings pending by or against any transferor company;
(iv)
the dissolution, without winding up, of any transferor
company;
(v)
the provisions to be made for any person who,
within such time and in such manner as the tribunal directs, dissent from the
compromise or arrangement; and
(vi)
such incidental, consequential and supplemental
matters as are necessary to secure that the reconstruction or amalgamation
shall be fully and effectively carried out.
3.
Is it necessary for the
Court to consider the report of the Registrar of Companies prior to grant of
sanction?
It is mandatory for the court to consider not only report of Registrar
of Companies concerned but also the report of Official Liquidator prior to
sanctioning the scheme of amalgamation. The Registrar of Companies &
Official Liquidators have to make a report to the Court that the affairs of the
company are not being conducted in a manner, prejudicial interest of their
member or to public interest.
4.
Is it possible to have the
merger with retrospective effect?
Yes, a merger can be made effective from a past date, i.e. it can be
retrospective. However, effective date, which is too far in the past, can
create problems and adverse implication for such a merger in the form of
non-compliance of various laws cannot be ruled out.
5.
Can the merger be effective
from a future date?
There is no bar to have the effective date of amalgamation in future.
Incidentally, majority of the mergers are effective from a future date.
6.
What is the difference
between ‘Effective Date’ and the ‘Appointed Date’?
The ‘Appointed Date’ connotes the date of amalgamation i.e. the date
from which the undertaking including assets and liabilities of the transferor
company vest in transferee company. The ‘Effective Date’ signifies the
completion of all the formalities of merger.
7.
Is it possible to have
reduction of capital as part of the scheme of amalgamation?
Yes, it is possible to include reduction of capital as part of the
scheme of amalgamation provided the Articles of Association of the company
authorize such reduction and special resolution to this effect is passed as
contemplated under section 100 & 101 of the Act.
8.
In case reduction of capital
is inherent in a scheme of amalgamation, is it necessary to obtain separate
Court approval after following the laid down procedure?
There have been numerous decided cases which indicate that separate petition
under section 100 of the Act for reduction of capital need not be made if the
same is covered as a part of scheme of amalgamation. The Courts have held that
the provisions contained in section 391 are a complete code in itself. Thus, no
separate petition is necessary for reduction of capital which is a part of
scheme of amalgamation. However, in the resolution in which the approval for
scheme of amalgamation is sought must, in explicit terms, state that this
approval is also for reduction of capital, being part of the scheme.
9.
What is ‘Reverse Merger’?
‘Reverse Merger’ is a coined term generally used in those cases of
mergers where a company having higher networth is merging into a company having
networth lower than it.
10.
Do SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997 are applicable to amalgamation or
merger or demerger under the Act?
No, in cases of amalgamation or merger or demerger under the Act, SEBI
Takeover Regulations have no applicability as laid down in Regulation 3(1)(j)
of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
11.
Whether Transferor and
Transferee companies have to make separate petitions for approval of scheme of
amalgamation?
It has been held in some cases that where the entire undertaking of the
transferor company is transferred to the transferee company not affecting the
rights of the creditor or members inter se and there is no reorganization of
capital of the transferee company, there is no need for the transferee company
to file a separate petition. In practice, however, the petition is generally
preferred by the transferee company.
12.
Is it necessary to obtain
approval of the Stock Exchanges prior to filing of amalgamation petition with
the Court in case of listed companies?
The only obligation of listed companies, as provided in clause 24 of the
Listing Agreement, is to file any scheme/petition propose to be filed before
any Court/Tribunal under sections 391, 394 & 101 of the Act with the stock
exchange for approval at least one month before it is presented to the Court or
Tribunal. The requirement is, therefore, to file the Scheme/Petition at
least 30 days prior to filing it with the Court/Tribunal. It is not necessary
to obtain prior approval of the stock exchange. The Courts have ruled
that non-receipt of approval from stock exchange does not bar the Courts to
approve the amalgamation/merger as the approval of the stock exchanges is a
mere procedural formality.
13.
How the approval of
shareholders’ and creditors’ are obtained in cases of amalgamation/merger?
The approval of shareholders’ and creditors – secured and unsecured are
obtained in meetings convened under the directions of the Court. The Court
normally appoints a Chairperson and an alternate Chairperson for each such
meeting. The application is made to the Court for directing convening of
meetings and the Court can issue directions on any or all of the following
matters:-
a) Date, time and place
of meetings;
b)
Appointment of chairperson for the meetings;
c)
Contents of notice and the manner of service of
Notice;
d)
Determination of the class/classes of members and
creditors whose meetings are to be held;
e)
Determination of quorum;
f)
Any other matter as the court may deem fit.
14.
Is it possible to obtain
dispensation of the meetings of shareholders or creditors?
It is the discretion of the Court and generally where it is shown that
creditors or members have given their consent to the scheme of amalgamation and
their interest are not prejudicially affected, the Courts grant dispensation.
The judicial discretion is exercised after careful considerations of the facts
and circumstances of the case. A case in example could be grant of dispensation
of shareholders’ meeting in a company with few shareholders and all of them
have given their consent in writing.
15.
Is voting by show of hands
is allowed in meetings of creditors or members in which approval of the Scheme
of Amalgamation is the only agenda item?
The voting at Court convened meetings of members or creditors is to done
through poll only. The voting by show of hands is not permissible.
16.
Is it necessary to pass a
special resolution i.e. 3/4th majority for approval of scheme of
amalgamation?
Section 391(2) requires that the resolution approving the scheme of
amalgamation should be passed by majority in number representing 3/4th
in value of the creditors or members. Both the conditions are cumulative.
However, conditions of majority in number and representing 3/4th
in value is to be applied for members or creditors present in person
or through proxies at the time of meeting.
17.
Is it necessary to submit
report of Chairman to the Court?
It is incumbent upon the Chairperson to submit report of proceedings of
the meeting indicating –
a) the number of
persons present at the meeting;
b)
the number of persons voting in person and through
proxy;
c)
the value of shares/indebted amount;
d)
the votes cast in favour of the resolution; and
e)
the votes cast against the resolution.
18.
How the share exchange ratio
is decided?
The share exchange ratio is derived or decided on the basis of valuation
done by a Chartered Accountant. Considering the valuation report, share
exchange ratio is arrived upon.
19.
Whether it is mandatory to
obtain Chartered Accountants report or share exchange ratio can be derived
without it?
Though it is not mandatory to obtain CA report, it is important to
arrive at share exchange ratio on the basis of such a report only as the Courts
rely to a greater degree on such reports, being given by financial experts and
the Courts are suspicious of genuineness of share exchange ratio which has been
arrived at without such a report.
20.
Is there any Accounting
Standard on ‘Accounting for Amalgamations’?
The Institute of Chartered Accountants of India (ICAI) has issued AS-14
Accounting for Amalgamations which deal with accounting treatment and
disclosure in case of Amalgamations.
DUE DILLIGENCE IN MERGERS AND AMALGAMATIONS
Due Dilligence refers to the process of
appraising, assessing and evaluating business risk with analysis of cost
benefit which is involved in Merger & Amalgamation. It is like trying to
find a switch to put on the light when in entering a dark room. The decision to
merge or amalgamate has to be based on considered opinion, which can be formed
only after scanning of information and records available. Due Dilligence
embraces the assessment process to judge the benefits vis-Ã -vis the troubles
that will be faced in post merger scenario.
The process of due diligence cannot be sidestepped in Mergers and
Acquisitions.
Due Dilligence
is a broader term than financial audit. In financial audit, the auditors are
mainly concerned so far as the material accuracy of the financials and its
presentation in the form of statements with a view to provide true and fair
picture of entity’s financials. The due diligence process goes beyond the books
of account maintained by the entity and involves analysis of actions of entity
– assessment of problems faced by the entity, impact of legal cases, tax
assessments, hidden liabilities etc. The due diligence process includes review
of cash flows – past and future, status of tax assessments and its financial
impact, valuation of assets, digging out hidden liabilities after an
independent assessment, assessment of viability, review of technical
feasibility, assessment and analysis of information technology security systems
etc. In short, it encompasses –
1. Review of Commercial
viability
2. Review of Financial
liability
3. Review of Tax
Assessments
4. Review of Legal
cases
5. Review of Manpower
Resources
6. Review of compliance
of laws
The due diligence process is a team work consisting of chartered
accountants, lawyers, valuers having expertise in their own field. The
assessment, review, analysis, scrutiny and examination under due diligence
process involves specialization and application of mind which goes beyond fact
finding exercise i.e. mere checking of records available. The Chartered
Accountants play a major role in due diligence process and no meaningful due
diligence would be complete without their participation. The team, which has
been, assigned the task of due diligence follows the following steps: -
1. Identification of
the purpose of Merger and Acquisition.
2. Review and Study of
past Business operations.
3. Study of Information
System within the organization.
4. Collection of
Documents.
5. Assemblage of Key
Information from Management and Independent sources.
6. Allocation of review
responsibilities amongst team members.
7. Compilation of
findings of team members.
8. Assessment of
findings.
9. Preparation of due
diligence report.
Due Dilligence Checklist
Step 1 – Collection of Documents/Information from Management
1.
Memorandum & Articles of Association of the
entity.
2.
Financial Statements consisting of Balance Sheet,
Profit & Loss Account, Schedules, Cash Flow Statement, Notes to Accounts,
Auditor’s Report and Director’s Report for last 3 years or 5 years.
3.
Projected Business and Income Scenario.
4.
Foreign Collaboration Agreements.
5.
Technical Collaboration Agreements.
6.
Intellectual Property Rights – Copyrights, Patents
& Trade Marks
7.
Pending Litigation details with estimated financial
liability
8.
Licenses, quota rights etc.
9.
Government Approvals including Environmental
clearances
10.
Correspondence with Government Authorities
11.
Marketing Network Details with feasibility studies
12.
Brand and Goodwill Valuation
13.
Internal audit Reports
14.
Tax Assessments and Tax Audit Reports for last 3 or
5 years
15.
Loan Agreements and Charge Certificates
16.
Corporate Guarantees given
17.
Lease Agreements
18.
Shareholding Details
19.
Technical Feasibility Reports
20.
Pending Contracts/Orders in hand
21.
Internal Control Systems and Processes
22.
Statement of Inventory for last 3 or 5 years
23.
Dealership and franchisee Agreements
24.
Employee Contracts
25.
Payroll Liability
26.
Status of Statutory Dues including Labour Dues
27.
Titles and ownership of Property and Assets
28.
Status of Contingent Liabilities
29.
Sales and Purchase Agreements
30.
Pricing Policy
31.
MOU’s and Shareholders’ Agreements
32.
Joint Venture Agreements
33.
Subsidiary and Associate Company Details and
financials
34.
Warranty Agreements
35.
Insurance Policies
36.
Cenvat Credit on Capital Goods
37.
ESOP’s and Sweat Equity Shares
38.
Segment Information
39.
Information Technology Systems
40.
IT Security Measures
41.
Minutes of Board and Committee Meetings
Step 2 – Assemblage of Information from Independent Sources
1.
Industry Data
2.
Independent Search of Title Deeds
3.
Market Reports and Studies
4.
Customer Reports
5.
Product Feasibility Report
6.
Past Litigation Record and Orders
7.
Prosecution of Company and Directors for offences
for non-compliance of laws
8.
Procurement of certified copies of Financial
Statements and other documents
9.
Search Report for Charges and Mortgages
10.
Credit Report from Bankers/Financial institutions
Step 3 – Review of Documents/Information
1.
Over valuation of Assets
2.
Under Valuation of Liabilities
3.
Hidden Liabilities
4.
Product warranties/claims
5.
Financial Liability arising out of Pending
Litigation
6.
Guarantees/Comfort Letters/Letters of Credit given
7.
Statutory Dues Liability including Interest and
Penalty
8.
Non-recoverable Assets
9.
Bad and Doubtful Debts
10.
Likelihood of accrual of contingent liabilities
11.
Over valuation of Intangible Assets
12.
Technological Obsolescence
13.
Tax liabilities in future
14.
Status of Labour Management Agreements with
reference to retrenchment
15.
Slow-moving, Non-moving & Obsolete Inventory
16.
Valuation Method of Inventory
17.
Compliance of various Laws
18.
Compliance of Accounting Standards
19.
Intellectual property Restrictive Covenants
20.
IT security measures
21.
Identification of Items not disclosed
22.
Correctness of financial figures
23.
Quality of Management and Leadership
24.
Research and Development Programmes
25.
Market Reputation
26.
Governance policies
CHECLIST/STEPS FOR AMALGAMATION/MERGER
|
S. No.
|
STEPS
|
|
1)
|
Due Diligence.
System, Business,Tax, Financial & Legal Due Diligence
|
|
2)
|
Calling Board
meeting to appoint valuers , lawyers and consultants
|
|
3)
|
Notifying the
Stock Exchange, if applicable, about Board Meeting for the proposed
Amalgamation
|
|
4)
|
Determination
of Share Exchange Ratio on the basis of Report of a Chartered Accountant.
|
|
5)
|
Approval of
Scheme of Amalgamation
|
|
6)
|
Notification
to Stock Exchanges, press releases, if applicable
|
|
7)
|
Intimation to
Bankers, Financial Institutions and other secured creditors and obtain their
consent
|
|
8)
|
Application to
be filed to the Court for direction to convene the Extraordinary General
Meeting of Shareholders, Creditors – Secured and Unsecured or to obtain
dispensation.
|
|
9)
|
Draft notice,
form of proxy and approved by the Registrar of the Court or companies, if
meetings not dispensed with
|
|
10)
|
Despatch of
notices for holding the meeting to pass the resolution along with the
explanatory statement as required under section 393(1)(a) of the Companies
Act, 1956.
|
|
11)
|
Publication of
advertisement in English & Local Language newspapers , as approved by the
Court, regarding holding of the Meetings of Shareholders and Creditors.
|
|
12)
|
Filing of
Report in the form of affidavit by the Chairpersons of the meetings with the
Court.
|
|
13)
|
Holding of
General Meeting to approve Merger or Amalgamation with requisite majority
|
|
14)
|
Passing of
Resolution approving the Scheme of Amalgamation subject to High Court
confirmation by both companies
|
|
15)
|
Filing of
Resolutions with the registrar of companies within 30 days in Form No. 23.
|
|
16)
|
Filing of the
petition with High Court for approval of the scheme within 7 days of filing
of chairman’s reports of meetings
|
|
17)
|
Notice to the
official liquidator of the Transferor Company and from Registrar of Companies
of Transferor and Transferee company(ies)
|
|
18)
|
Publication of
advertisement as approved by the Court notifying the date of hearing fixed by
the High Court regarding consideration of petition.
|
|
19)
|
Official
Liquidator & Regional Director to submit reports – Follow-up required
|
|
20)
|
Hearing by the
Court and prior to passing order allowing the scheme , to hear objections.
Court may approve, with or without conditions.
|
|
21)
|
Filing of
certified copy of Court’s Order with the Registrar of Companies within 30
days in form No. 21.
|
|
22)
|
To carry out
the scheme of amalgamation as approved by the High Court issuing notices,
allotting shares, etc.
|
|
23)
|
Allotment of
shares and to file Return of allotment with the Registrar of Companies in
Form No. 2.
|
Draft
Resolution of the Board approving the Scheme of Amalgamation
“RESOLVED
pursuant to the provisions of sections 391 to 394 and other applicable
provisions, if any, of the Companies Act, 1956 and subject to the approval of
the members/creditors and approval by the High Court of Delhi at New Delhi, the
Scheme of Amalgamation in terms of the draft produced at the meeting duly
initialed by the Chairman for the purpose of identification, be and is hereby
approved for amalgamation of the company with XYZ Limited with effect from 1st
April, 2005 being the ‘Appointed Date’.”
“RESOLVED
FURTHER that Mr. _____________ and Mr. ________________, Director of the
company be and are herby severally authorized to sign any application,
affidavit, petition or any other document as may be required to be signed in
connection with the approval of the Scheme. They are further authorized to do
all such things, deeds and acts as may be deemed necessary and expedient in
connection with the approval of the Scheme, for and on behalf of the company.”
“RESOLVED
FURTHER THAT Mr. _______________ and Mr. ______________, Directors of the
company be and are hereby authroised to appoint and engage any advocate or firm
of advocates and solicitors to represent the company for approval of the
Scheme.”
DRAFT SCHEME OF ‘DEMERGER’
SCHEME
OF ARRANGEMENT & DEMERGER
BETWEEN
ABC
LIMITED
AND
XYZ
LIMITED
AND
THEIR
RESPECTIVE SHAREHOLDERS AND CREDITORS
(Under
Sections 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956)
1. PREAMBLE:
1.1 ABC LIMITED is a Company incorporated
under the provisions of the Companies Act, 1956 having its registered office at
____________________________________________.
1.2 ABC LIMITED has 2 main divisions,
namely; (a) ABC Products Division with factory located at
_______________________________________________and (b) DEF Division with
factory located at __________________________________________________.
1.3 The (a) ABC
Products Division is engaged in the business of manufacturing & trading in
all kinds of ______________________________________________; and (b) the DEF
division is engaged in the business of manufacture, assembling and sale of all
kinds of ______________________________________.
1.4 XYZ LIMITED is a
company incorporated under the Companies Act, 1956 having its registered office
at _____________________________________ and is engaged in the business of
manufacture and sale of various kinds of ___________________________________.
1.5 As a measure of
corporate restructuring, more efficient use of existing resources, operation on
a broader scale, increasing efficiency in business operations and to realise
the potential for further growth, ABC LIMITED has decided to demerge its DEF
Division. The proposed demerger will enable ABC LIMITED to concentrate on its
core business i.e. ABC Division and to combat fierce competition arising out of
entry of global players. The demerger will provide a specialized DEF business
to XYZ LIMITED, which in turn shall be able to chalk out growth plan thereby
increasing profitability of the Division.
1.6 ABC LIMITED proposes by this Scheme of
Arrangement to separate the DEF Division by demerging it to XYZ LIMITED and
restructure the respective companies ABC LIMITED & XYZ LIMITED post
demerger.
1.7 To give effect to the said proposal,
the Scheme of Arrangement & Demerger is presented for approval of the
Hon’ble High Court at Delhi.
2. DEFINITIONS:
In this Scheme
unless repugnant to the meaning or context thereof, the following expressions
shall have the following meaning:-
A. `The Act’ means the Companies Act, 1956.
B. The “Appointed Date” means April 1, 2005, the date with effect from
which the scheme of Arrangement & Demerger shall be applicable.
C. “Court” means the Hon’ble High
Court of Judicature at Delhi.
D. The `Effective Date’ means the date by which last of the approvals
specified in this Scheme shall have been obtained.
E. The `DEF Division’ means the unit of ABC LIMITED at ………. (Delhi) and
shall also include -
(i)
all
the assets whether moveable or immoveable, tangible or intangible including all
rights , title , interest, covenant, undertakings, liabilities including
continuing rights, title and interest in connection with the land and the
buildings thereon whether leasehold or otherwise, plant and machinery whether
leased or otherwise, together with all present and future liability including
contingent liabilities and debts appertaining thereto, of the Transferor
Company of all of which relate to the DEF Division, as more fully set out in the Schedule I hereof.
In particular, the details of the material parcels of land are included in
Schedule II hereof.
(ii) All permits, quotas, rights,
industrial and other licences, branches, offices, depots and godowns, trade
marks, trade names, know-how and other and other intellectual property,
patents, copyrights, privileges and benefits of all contracts, agreements and
all other rights including lease rights, licenses, powers and facilities of
every kind, nature and description whatsoever pertaining to the DEF Division as
set out in Schedule III hereof.
(iii) All permanent employees of ABC LIMITED
engaged in or in relation to DEF Division at the factory, branches or other
offices;
(iv) All earnest moneys and/or security
deposit paid by ABC LIMITED in connection with or relating to the DEF Division;
F. “Record Date” means the date to be fixed by the Board of Directors
of ABC LIMITED for the purpose of determining the member of ABC LIMITED to whom
the shares of XYZ LIMITED will be allotted pursuant to this Scheme.
G. “Scheme”
means this scheme of Arrangement & Demerger in its present form
submitted to the Court for sanction or with any modification(s) approved or
imposed or directed by the Court.
H. “ABC
LIMITED’ or the Transferor Company” means ABC LIMITED, incorporated under
the Companies Act, 1956 having its registered office at
_________________________________________.
I. “XYZ LIMITED” or the
Transferee Company” means XYZ LIMITED, the Transferee Company, incorporated
under the Companies Act, 1956, having its registered office at
________________________________________________.
3. SHARE CAPITAL:
(a) Existing
Share Capital of ABC LIMITED.
(i) Authorised Share Capital Rs. 3, 60,00,000.00
36,00,000 equity
shares of Rs. 10/- each
(ii) Issued Share Capital Rs.3,23,80,140.00
32,38,014 Equity
Shares of Rs.10 each
(iii) Subscribed and paid up Capital Rs.3,17,07,750.00
31,70,775 equity
shares of Rs.10 each fully paid up
(b) Existing
Share Capital of XYZ LIMITED
(i) Authorised Share Capital Rs…………
(ii) Issued Share Capital Rs…………
……………….. Equity Shares of Rs.10 each
(iii) Subscribed and paid up Capital Rs…………
…………… Equity shares of
Rs.10 each fully paid up.
4.
TRANSFER OF DEF DEVISION:
4.1 The DEF Division of ABC LIMITED shall
be Demerged and transferred to and vested in or be deemed to be transferred to
and vested in XYZ LIMITED in accordance with Section 2(19AA) of the Income tax
Act, 1961 and in the manner enumerated in ensuing paragraphs.
4.2 With effect from
the Appointed Date, the DEF Division shall, without any further act or deed, be
transferred to and vested in or be deemed to have been transferred to and
vested in XYZ LIMITED for all the estate and interest of ABC LIMITED, subject
to existing securities, charges and mortgages, if any subsisting thereon in
favour of banks, financial institutions, as may be modified, re-adjusted,
apportioned or re-allocated by them.
4.3 All debts,
liabilities, contingent liabilities, duties and obligations of ABC LIMITED
relating to the DEF Division as on the Appointed Date whether provided for or
not in the Books of Accounts of ABC LIMITED, whether disclosed or undisclosed
in the Balance Sheet of ABC LIMITED shall, without any further act or deed, be
the debts, liabilities, contingent liabilities, duties and obligation of XYZ
LIMITED and XYZ LIMITED undertakes to meet, discharge and satisfy the same.
4.4 XYZ LIMITED
undertakes to pay, discharge and satisfy all debts, liabilities, duties and
obligations of ABC LIMITED relating to DEF Division as on the Appointed Date
and all liabilities, debts, duties, obligations relating to the said division
which may accrue or arise after the Appointed Date.
4.5 It
is expressly clarified that with effect from the Appointed Date, all taxes,
duties, excess payable by Transferor Company relating to the DEF Division and
all or any refunds/ credit including MAT credit/ claims relating thereto shall
be treated as the liability or refund/ credit including MAT credit/ claims, as
the case may be, of Transferee Company.
4.6 Transferor
Company shall permit Transferee Company to use its brand "PQR" and
corporate logo as a part of its brand name and marketing I promotional material for products, namely ___ Assemblies, subject to
such terms and conditions as may be agreed to between Transferor Company and
Transferee Company.
5. CONTRACTS, DEEDS, BONDS AND OTHER
INSTRUMENTS
5.1
Subject
to the other provisions contained in this Scheme all contracts, deeds, bonds,
agreements and other instruments of whatever nature relating to the DEF
Division to which ABC LIMITED is a party subsisting or having effect
immediately before the arrangement shall remain in full force and effect
against or in favour of XYZ LIMITED and may be enforced as fully and
effectually as if instead of ABC LIMITED, XYZ LIMITED had been a party thereto.
5.2 With effect from the Appointed date,
all permits, quotas, rights, industrial and other licences, branches, offices,
depots and godowns, trade marks, trade names, know-how and other and other
intellectual property, patents, copyrights, privileges and benefits of all
contracts, agreements and all other rights including lease rights, licenses,
powers and facilities of every kind, nature and description whatsoever
pertaining to the DEF Division of ABC LIMITED to which ABC LIMITED is a party
or to the benefit of which ABC LIMITED
may be eligible and which are subsisting or having effect immediately before
the Effective Date, shall be and remain in full force and effect in favour of
or against XYZ LIMITED as the case
may be, and may be enforced as fully and effectually as if, instead of ABC
LIMITED, XYZ LIMITED had been a party or beneficiary or obligee thereto.
5.3 With
effect from the Appointed Date, any statutory licenses, no objection
certificates, permissions or approvals or consents required to carry on operations
in the DEF Division of ABC LIMITED shall stand vested in or transferred to XYZ
LIMITED without further act or deed, and shall be appropriately mutated by the
statutory authorities concerned therewith in favour of XYZ LIMITED upon the
vesting and transfer of DEF Division of ABC LIMITED pursuant to the scheme. The
benefit of all statutory and regulatory permissions, factory licenses,
environmental approvals and consents including the statutory licenses,
permissions or approvals or consents required to carry on the operations of the
DEF Division shall vest in and become available to XYZ LIMITED pursuant to the
scheme.
5.4 The XYZ LIMITED, at any time after the
coming into effect of this Scheme in accordance with the provisions hereof, if
so required under any law or otherwise, will execute deeds of confirmation or
other writings or arrangements with any party to any contract or arrangement in
relation to the DEF Division of ABC LIMITED to which ABC LIMITED is a party in
order to give formal effect to the above provisions. XYZ LIMITED shall, under
the provisions of this Scheme, be deemed to be authorized to execute any such
writings on behalf of ABC LIMITED and to carry out or perform all such
formalities or compliances referred to above on part of ABC LIMITED.
6. LEGAL PROCEEDINGS
All legal or other proceedings
including any suits, appeals, arbitrations, execution proceedings, references,
review, revisions, writ petitions, if any, by or against DEF Division of ABC
LIMITED under statute, whether pending on the Appointed Date or which may be
instituted in future in respect of any matter arising before the Effective Date
and relating to the DEF Division (including those relating to any property,
right, power, liability, obligation or duties of ABC LIMITED in respect of the
DEF Division ] shall be continued and enforced by or against XYZ LIMITED
only. If proceedings are taken against
ABC LIMITED, ABC LIMITED will defend the same as per advice of XYZ LIMITED at
the cost of XYZ LIMITED and the latter will reimburse and indemnify ABC LIMITED
against all liabilities and obligations incurred by ABC LIMITED in respect
thereof.
7. TRANSFEROR
COMPANY’S STAFF, WORKMEN AND EMPLOYEES
(a) All permanent employees of ABC
LIMITED engaged in the DEF Division at its factories, branches and other
offices and elsewhere and who are in the employment of ABC LIMITED shall stand
transferred to XYZ LIMITED with continuity of service and on the same terms and
conditions on which they are engaged as on the Effective Date by ABC LIMITED. XYZ LIMITED shall undertake to continue to
abide by any of the Agreement/Settlement etc entered into by ABC LIMITED in
respect of DEF Division with any Union/employees of DEF Division. XYZ LIMITED agree that the service of all
such employees with ABC LIMITED upto the Appointed Date shall be taken into
account for purposes of all retirement benefits for which they may be eligible
in ABC LIMITED upto the Effective Date.
XYZ LIMITED further agree that for the purpose of payment of any
retrenchment compensation, gratuity and other terminal benefits such past
services with ABC LIMITED shall also be taken into account and agrees and
undertakes to pay the same as and when payable.
(b) XYZ LIMITED undertakes that the
existing Employees Welfare measures including funds, trusts and arrangement,
organised and created by ABC LIMITED for its employees of DEF Division shall be
continued for the benefit of such employees, including employees who may join
XYZ LIMITED after the Appointed Date on the same terms and conditions and with
effect from such day XYZ LIMITED shall make the necessary contributions for
such employees taken over by XYZ LIMITED until XYZ LIMITED constitutes its own
arrangements and obtains necessary approval for the same.
8. CONDUCT OF BUSINESS BY TRANSFEROR
COMPANY TILL EFFECTIVE DATE
With
effect from the Appointed Date and upto and including the Effective Date:
(a)
Transferor
Company shall be deemed to have been carrying on and to be carrying on all
business and activities relating to the DEF Division of Transferor Company for
and on behalf of Transferee Company.
(b)
All
income, expenditures including management costs, profits accruing to Transferor
Company and all taxes thereof or losses arising or incurred by it relating to
the DEF Division of Transferor Company shall, for all purposes, be treated as
the income, expenditures, profits, taxes or losses, as the case may be, of
Transferee Company.
(c)
ABC LIMITED hereby undertakes
upto and including the Effective Date to carry on its business with proper
prudence and without the prior written consent of XYZ LIMITED not to alienate,
charge or otherwise deal with or dispose off the DEF Division or any part
thereof (except in the usual course of business) or undertake substantial
expansion of its existing business pertaining to the DEF Division.
9. ISSUE
OF SHARES BY THE TRANSFEREE COMPANY
a) Upon the Scheme being sanctioned by
the Hon’ble High Court of Delhi and it becoming effective and the transfer of
the DEF Division, becoming effective in terms of the Scheme, XYZ LIMITED shall
without any further application or deed, issue at par and allot on
proportionate basis to each member of ABC LIMITED, whose name is recorded in
the Register of Members of SPML on the Record Date or his/her heirs, executors,
administrators or the successors-in-title, as the case may be, __________
Equity shares of Rs. _______ each in XYZ LIMITED credited as fully paid-up in
the ratio of for every ______________ fully paid-up equity shares of Rs.
_______ each held by each such member of ABC LIMITED. The paid-up share capital
of ABC LIMITED shall stand reduced to the extent of net value of assets
(including reserves) and liabilities being transferred to XYZ LIMITED.
b) The reduction of capital as
mentioned above in this Scheme of Arrangement shall be effected as a part of
this composite Scheme itself and not under a separate process in terms of
Sections 100 to 103 of the Act as the same does not involve either diminishing
of liabilities in respect of unpaid share capital or any paid up capital.
10. DIVIDENDS, PROFITS, BONUS/RIGHTS
SHARES
10.1 ABC LIMITED shall
not declare any dividend for the period commencing from and after April 1, 2005
without the written consent of the Transferee Company.
10.2 Subject to the
provisions of the Scheme, the profits of the ABC LIMITED for the period
beginning from April 1, 2005 shall belong to and be the profits of the
Transferee Company and will be available to the Transferee Company for being
disposed of in any manner, as it thinks fit, including declaration of dividend
by the Transferee Company in respect of its financial year ending 31st
March, 2005 or any year thereafter.
10.3 ABC LIMITED shall
not issue or allot any Rights Shares or Bonus Shares, out of its Authorised or
unissued Share Capital for the time being.
11. TERM LOAN AND BANK
BORROWINGS/FACILITIES:
a) ABC LIMITED has obtained term loans
and bank borrowings/facilities from banks and financial institutions in respect
of the DEF Division against the security of the assets of the said division created
as per the details given in the annexure hereto.
b) Pursuant to the scheme, XYZ LIMITED
agrees and undertakes to pay the said term loans and bank/borrowings/facilities
with interest cost, charges and expenses as remain due upto the Transfer date,
pertaining to the DEF Division vested in it under the scheme and comply with
all terms and conditions on which such loans have been granted with such
modification as the aid institution/banks may stipulate.
c)
The
securities created by ABC LIMITED in favour of any of the financial
institutions/banks as mentioned hereinabove for the amounts of their
outstanding loans, borrowings/facilities on the movable and immovable
properties of the DEF Division, will continue to be in full force and effect
and shall remain binding on XYZ LIMITED for the amount of debt, liabilities,
and obligations.
d)
All
loans raised after the Appointed Date but before the Effective Date and used
and liabilities incurred by ABC LIMITED after the Appointed Date but before the
Effective Date for operations of the DEF Division shall be discharged by XYZ
LIMITED.
12. APPLICATIONS
TO HIGH COURT
On the Scheme being
agreed to by the requisite majorities of the members of ABC LIMITED and the
members of XYZ LIMITED, both ABC LIMITED as well as the XYZ LIMITED shall
respectively with all reasonable dispatch, make applications / petitions to the
Court for sanctioning this Scheme of Arrangement under Section 391 of the Act
read with Section 100 to 103 and other applicable provisions of the Act for carrying
this Scheme into effect. It is hereby clarified that submission of the Scheme
to the Court and to any authorities for their respective approvals is without
prejudice to all rights, interests, titles and defences ABC LIMITED and XYZ
LIMITED has or may have under or pursuant to all applicable laws.
13. MODIFICATIONS/AMENDMENTS TO THE
SCHEME
ABC LIMITED and XYZ
LIMITED may in their full and absolute discretion, assent from time to time, on
behalf of all persons concerned to any modifications or amendments to the
Scheme or agree to any terms and / or conditions which the Court and / or any
other authorities under law may deem fit to approve of or direct or impose or
which may otherwise be considered necessary or desirable or appropriate by them
in the best interest of the members for settling any questions or doubt or
difficulty that may arise, whether by reason of any order of the Court or of
any directive or orders of any other authorities or otherwise howsoever,
arising out of, under or by virtue of this Scheme and for the implementation
and / or carrying out of the Scheme, or in any matter connected therewith and
to do all acts, deeds, matters and things and take all such steps as may be
necessary, desirable or expedient for putting the Scheme into effect. The
aforesaid powers of ABC LIMITED and XYZ LIMITED may be exercised by their
respective Boards, a committee or committees of the concerned Board or any
Director authorized in that behalf by the concerned Board.
14. SCHEME CONDITIONAL ON APPROVALS/SANCTIONS
The Scheme is
conditional upon and subject to the following approvals/permissions and the
Arrangement shall be deemed to be completed on the Effective Date.
a) The approval of the Scheme by the
requisite majorities of such classes of persons of ABC LIMITED and XYZ LIMITED,
as may be directed by the Court on the applications made for directions under
Section 391 read with section 100 to 103 of the Act for calling meetings and
necessary resolutions being passed under the Act.
b)
The
sanctions of the Court of the Scheme of Arrangement under Sections 391 and 394
of the Act read with Section 100 to 103, in favour of ABC LIMITED & XYZ
LIMITED and to the necessary Order or Orders under Sections 391, 392 and 394 of
the Act.
c)
The
approvals of public financial institutions, banks and creditors wherever
necessary, under any contract entered into with them by ABC LIMITED and XYZ
LIMITED.
d)
The
Sanction or Approval under any law of the Central Government or any other
agency, department or authorities concerned in respect of any of the matters in
respect of which such sanction or approval is required.
e)
The
Scheme shall be subject to such modifications as the Court while sanctioning
such arrangement of ABC LIMITED with XYZ LIMITED may direct the Scheme once
sanctioned will be binding on all concerned.
f) Notwithstanding anything contained
hereinabove, the Scheme shall also become effective in terms of and upon the
fulfillment of requirements of any other law that may be brought into force in
this behalf before the Scheme otherwise becomes effective as hereinbefore
provided.
15. EFFECT
OF NON-RECEIPT OF APPROVALS/SANCTIONS
In the event of any
of the said sanctions and approvals referred to in clause 14 above not being
obtained and / or the Scheme not being sanctioned by the Court and / or the
order or orders not being passes as aforesaid, the Scheme of Arrangement shall
become null and void and shall stand revoked, cancelled and be of no effect and
in that event no rights and liabilities whatsoever shall accrue to or be
incurred by parties inter se, save and except in respect of any act or deed
done prior thereto as is contemplated hereunder or as to any right, liability
or obligation which has arisen or accrued pursuant thereto and which shall be
governed and be preserved or worked out as is specifically provided in the
Scheme or may otherwise arise in law. ABC LIMITED and XYZ LIMITED shall bear
their own costs, charges and expenses in connection with the Scheme unless
otherwise mutually agreed.
16. EXPENSES
CONNECTED WITH THE SCHEME
a) All costs, charges and expenses in
connection with the Scheme and of carrying on or completing the terms and
provisions of the Scheme including any incidental charges shall be borne and
paid by ABC LIMITED and XYZ LIMITED in equal shares.
b) In the event of non-fulfillment of
any or all obligations under the Scheme, by either ABC LIMITED or XYZ LIMITED,
the non-performance of which will put the other company under any obligation,
such defaulting company will indemnify all costs / interests etc. to the other
company, subject to a specific provision, if any, to the contrary under the
Scheme.
c)
All
costs, charges, taxes including duties, levies and all other expenses,
including legal expenses, if any (save where expressly provided otherwise) of
ABC LIMITED or XYZ LIMITED respectively in relation to or in connection with
this Scheme including negotiation leading upto the Scheme and for carrying out
and completing the terms and provisions of this Scheme and / or incidental to
the completion of arrangement of ABC LIMITED in pursuance of this Scheme shall
be borne and paid equally by ABC LIMITED and XYZ LIMITED.
17.
RESOLUTION OF
DOUBTS/DIFFERENCES
If any doubt or
difference or issue shall arise between the parties hereto or any of their
shareholders, creditors, employees and / or any other person as to the
construction hereof or as to any account or apportionment to be taken or made
of any asset or liability transferred under this Scheme or as to the accounting
treatment thereof or as to anything else contained in or relating to or arising
out of this Scheme, the same shall be decided by the mutual agreement between
the Board of Directors of ABC LIMITED and XYZ LIMITED whose decision shall be
final and binding on all concerned.
DRAFT SCHEME OF AMALGAMATION
In this Scheme,
unless inconsistent with the subject or context:
(a)
“The Transferor Company” means ABCD Limited an
Existing Company under section 3 of the Companies Act, 1956, having its
Registered Office at __________________, in the State of _______________.
(b)
“The Transferee Company” means WXYZ Limited, a
Company incorporated under the Companies Act, 1956, having its Registered
Office at _____________________, in the State of _______________.
(c)
“The Act” means the Companies Act, 1956.
(d)
“The Appointed Date” or “The Transfer Date” means
April 1, 2005.
(e)
“The Effective Date” means the date on which the
last of the approvals hereinafter provided will have been obtained. However,
for the purposes of Income Tax Act, the Effective Date shall be April 1, 2005,
and for the purposes of allotment of shares of Transferee Company, the Board of
Directors of the Transferee Company may fix the date.
(f)
“The Scheme” means the Scheme of Amalgamation of
ABCD Limited With WXYZ Limited as contained herein, or as sanctioned by the
___________ High Court, with modifications, if any.
(g)
For the purpose of this Scheme, the Undertaking of
the Transferor Company shall include all rights and privileges, powers and
authorities, and all properties, movable and immovable, real or corporeal,
incorporeal in possession or reversion, present or contingent, of whatsoever
nature and wheresoever situated including in particular all licenses permits,
quotas, approvals, rights, claims, leases, tenancy rights and liberties,
patents, trade marks, and import quotas held by the Transferor Company o to
which the Transferor Company is entitled, and all debts, liabilities and duties
of the Transferor Company and all other obligations of whatsoever kinds
including liabilities in respect of the employees of the Transferor Company
agreed to be taken over by the Transferee Company, with regard to the payment
of gratuity, pension benefits, provident fund or compensation in the event of
voluntary retirement or retrenchment.
Share
Capital
A.
Transferor
Company
On March 31, 2005, the Authorised Share Capital of the Transferor
Company is Rs. 1,00,00,000 (Rupees One Crore) divided into 1,000,000 equity
shares of Rs. 10 each and Rs. 10,00,000 (Rupess Ten Lakhs) divided into
1,00,000 preference shares of Rs. 10 each. The issued Capital is Rs.
____________ (Rupees _______________) divided into ___________ equity shares of
Rs. 10 each and the subscribed and paid-up capital is Rs. _______________
(Rupees __________________) divided into ________ equity shares of Rs. 10 each.
B.
Transferee
Company
On March 31, 2005, the Authorised Share Capital of the Transferee
Company is Rs. 20,00,00,000 (Rupees Twenty Crores) divided into 2,00,00,000
equity shares of Rs. 10 each and ____________ Preference Shares of Rs. _______
each. The issued capital is Rs. __________________ (Rupees _________________)
divided into _____________ equity shares of Rs. 10 each and the subscribed and
paid-up capital is Rs. ____________ (Rupees _______________) divided into
_________________ equity shares of Rs. _____ each.
The
Scheme of Amalgamation
1. (a) The
Undertaking of the Transferor Company and particularly the immovable property
incapable of passing by manual delivery including licences, permits, quotas,
incentives, subsidies, approvals, rights, claims, leases, tenancy rights,
liberties, patents, trade marks and import quotas shall under the provisions of
Sections 391 and 394 of the Act and pursuant to the Orders of _______ High
Court without any further act or deed but subject to the charges affecting the
same as on the Effective Date, shall be transferred to and vested in the
Transferee Company so as to become the Undertaking and property of the
Transferee Company from the Appointed Date. Provided, however, that such charge
shall not extend over or be deemed to be extended over any of the assets of the
Transferee Company already owned and held by the Transferee Company.
(b) With effect from the Appointed Date, all debts,
liabilities, duties and obligations of the Transferor Company (hereinafter referred
to as “the said liabilities”) shall, pursuant to the Order under Section 394 of
the Companies Act, 1956, of ______ High Court and without further act or deed
be transferred or deemed to be transferred to and vested in and assumed by the
Transferee Company so as to become the debts, liabilities, duties and
obligations of the Transferee Company.
(c)
Upon
this Scheme becoming effective, the items appearing as Reserves and Surplus in
the books of the Transferor Company as at the Appointed Date shall become the
corresponding reserves and surplus of the Transferee Company.
2.
If
any suit, appeal, or other proceedings of whatever nature (hereinafter called
the “proceedings”) by or against the Transferor Company be pending, the same
shall not abate, be discontinued or be in any way prejudicially affected by
reason of the Transfer of the undertaking of the Transferor Company or of
anything contained in the Scheme, but the proceedings shall be continued,
prosecuted and enforced by or against the Transferee Company in the same manner
and to the same extent as they would or might have been continued, prosecuted
or enforced by or against the Transferor Company if the Scheme had not been
made.
3.
The
transfer of undertaking under Clause 1 hereof and the continuance of the proceedings
by or against the Transferee Company under Clause 2 hereof, shall not affect
any transactions or proceedings already concluded by the Transferor Company, in
the ordinary course of business on or after the Transfer Date to the end and
intent that the Transferee company accepts and adopts on behalf of itself all
acts, deeds and things done lawfully and executed by the Transferor Company in
regard thereto as having been done or executed on behalf of the Transferee
Company.
4.
As
from the Transfer Date, the Transferor Company shall be deemed to have carried
on and to be carrying on its business for and on behalf of and on account of
and in trust for the Transferee Company until such time that the amalgamation
becomes effective in terms of the Scheme.
5.
As
from the Transfer Date, the Transferor Company shall carry on the business of
the Transferor Company until the amalgamation becomes effective, with utmost
prudence and shall not without concurrence of the Transferee Company alienate,
charge or otherwise deal with the property or assets of the Transferor Company
or any part thereof, except in the ordinary course of business.
6.
With
effect from the Transfer Date and up to and inclusive of the Effective Date,
all the profits and incomes accruing or arising to the Transferor Company or
expenditure and losses incurred or arising as the case may be by the Transferor
Company shall, for all purposes, be treated and be deemed to be and accrue as
profits or income or expenditure or losses, as the case may be of the Transferee
Company.
7.
Subject
to the other provisions contained in the Scheme, all lawful contracts, deeds,
bonds, agreements and other instruments of whatever nature to which the
Transferor Company is a party subsisting or having effect immediately before the
amalgamation shall be in full force and effect against or in favour of the
Transferee Company and may be enforced as fully and effectively as if instead
of the Transferor Company, the Transferee Company had been a party thereto.
8.
(a) All employees of the Transferor
Company in the employment of the Transferor Company on the Effective Date,
shall, as from the said date become the employees of the Transferee Company on
the basis that their services have not been interrupted by the vesting of the
undertaking of the Transferor Company in the Transferee Company under the
Scheme and that the terms and conditions of service applicable to them
immediately after the Effective Date will not be in any way less favourable to
them, than those applicable to them immediately before the Effective Date.
(b)
As
far as the Provident Fund, Gratuity Fund, Superannuation Fund or any other
Special Fund created or existing for the benefit of the employees of the
Transferor Company are concerned, upon the Scheme becoming effective, the
Transferee Company shall be substituted for the Transferor Company for all the
purposes whatsoever related to the administration or operation of such Schemes
or Funds or in relation to the obligation to make contributions to the said
Funds in accordance with provisions of such Schemes or Funds according to the
terms provided in the respective Trust Deeds or other documents. All the
rights, duties, powers, and obligations of the Transferor Company in relation
to such Schemes or Funds shall become those of the Transferee Company. The
services of the employees of the Transferor Company will be treated as being
continuous for the purposes of the aforesaid Schemes or Funds.
9. (a) Upon
the Scheme become effective, in consideration of the transfer to and vesting of
the undertaking of the Transferor Company in terms of the Scheme, the
Transferee Company shall, with any application being made by the shareholders
of the Transferor Company, issue and allot to the equity shareholders of the
Transferor Company, equity shares in the Transferee Company in the proportion
of 1 (one) share of the face value of Rs. 10 each of the Transferee Company,
credited as fully paid up for every 25 (twenty five) fully paid up equity
shares of the face value of Rs. 10 each, held by the equity shareholders of the
Transferor Company on such date as the Board of Directors of the Transferee
Company may decide.
(b) As a result of the issue and
allotment of the share capital of the Transferor Company in the manner
specified in sub-clause (a) to this Clause hereinabove, if any equity
shareholder of the Transferor Company becomes entitled to any fraction of
equity shares of the Transferee Company, no such fractional coupon shall be
issued in respect of or representing such equity shares of the Transferee
Company, but such fractional coupon shall be consolidated into whole equity
shares and the Board of Directors of the Transferee Company, or a Committee
thereof may allot any one or more of such consolidated shares to any nominee(s)
as the Board of Directors or the Committee may their absolute discretion deem
fit for the purpose of holding and selling of such consolidated equity shares.
Every such sale of the consolidated equity shares shall be at such price or
prices as may be approved by the Board of Directors or the Committee and upon
receipt of the purchase price in respect of such sale (provided the Board of
Directors or the Committee approved the purchaser), the Board of Directors or
the Committee shall allot the equity shares to the approved purchaser/s. the
total net sale proceeds of such consolidated equity shares (after defraying
therefrom all costs, charges, and expenses of sale) shall be distributed and
divided among those equity shareholders of the Transferor Company as would
otherwise have been entitled to such fractions of the equity shares of the
Transferee Company in proportion to their respective interest in such
fractions.
(c)
Equity
shares so allotted by the Transferee Company to the shareholders of the
Transferor Company will in all respects rank pari-passu with the existing
equity shares of the Transferee Company for dividend, voting and other rights.
(d)
Every
shareholder of the Transferor Company shall surrender to the Transferee Company
for cancellation, the relevant share certificate(s) held in the Transferor
Company and thereupon the Transferee Company shall issue the certificate(s) for
the shares in the Transferee Company he or she may be entitled to.
10.
The
____________ equity shares of Rs. _____ each, paid up, in the Transferor Company
are held by the Transferee Company. The said _________ equity shares shall be
transferred by the Transferee Company before the date of allotment of shares by
it pursuant to Clause 9 hereof, to such party/parties as the Board of Directors
of the Transferee Company may think fit.
11.
Upon
the Scheme becoming effective, the Main Objects of the Memorandum of
Association of the Transferor Company shall form part of the Main Objects of
the Memorandum of Association of the Transferee Company.
12.
On
the Scheme being agreed to by the requisite majorities of the members of the
Transferor Company and of the members of the Transferee Company, the Transferor
Company and the Transferee Company shall with reasonable despatch, apply to the
High Court of Judicature at Mumbai for obtaining sanction to this Scheme of
Amalgamation under Section 391 of the Act and for an Order or Orders under
Section 394 of the Act for carrying this Scheme into effect and for dissolution
of the Transferor Company without winding up as also any Order or Orders as may
be necessary and appropriate under the Act.
13.
The
Scheme is conditional upon and subject to: -
(a)
The
Scheme being agreed to by the respective requisite majorities of the members of
both the Companies as are referred to in clause 12 hereof and the requisite
Order or Orders referred to in Clause 12 being obtained;
(b)
Such
other sanction and approvals as may be required by law in respect of the Scheme
being obtained.
14.
This
Scheme, although to come into operation from the Appointed Date, shall not
become effective until the date on which the certified copies of the Orders
under Sections 391 and 394 of the Act shall be duly filed with the Registrar of
Companies, Maharashtra State, Mumbai.
15.
In
the event of any of the approvals or conditions required to be obtained or
fulfilled are not obtained or complied with on or before December 31, 2005, or
within such further period or periods as may be agreed upon by and between the
Transferor Company and the Transferee Company (through their respective Board
of Directors) the Scheme shall become null and void and in that event no rights
or liabilities whatsoever shall accrue to or be incurred inter se between the
Transferor Company and the Transferee Company.
16.
All
costs, charges and expenses of the Transferor Company and the Transferee
Company respectively in relation to or in connection with the negotiation
leading up to this Scheme or carrying out and completing the terms and
provisions of this Scheme shall be borne and paid by the Transferee Company.
17.
For
the purpose of giving effect to the Scheme, the Board of Directors of the
Transferee Company or any Committee thereof, is authorized to give such
directors as may be necessary or desirable and to settle as they may deem fit,
any question, doubt or difficulty that may arise in connection with or in the
working of the Scheme including with regard to issue and allotment of Equity
Shares under Clause 9 hereof, to the members of the Transferor Company and to
do all acts, deeds and things necessary for carrying into effect the Scheme.
18.
A
copy of the order of the _________________ High Court sanctioning the Scheme of
Amalgamation shall be filed by the Transferor Company and the Transferee
Company with Registrar of Companies, ____________, within one month from the
date the Order is received by the Transferor Company and the Transferee
Company.
TEXT OF RELEVANT
SECTIONS OF COMPANIES ACT, 1956 IN RELATION TO ARRANGEMENT, COMPROMISES,
AMALGAMATION/MERGERS
390.
Interpretation of sections 391 and 393 - In sections
391 and 393 -
(a)
the
expression “company” means any company liable to be wound up under this Act;
(b)
the
expression “arrangement” includes a reorganization of the share capital of the
company by the consolidation of shares of different classes, or by the division
of shares into shares of different classes or, by both those methods; and
(c)
unsecured
creditors who may have filed suits or obtained decrees shall be deemed to be of
the same class as other unsecured creditors.
391.
Power to compromise or make arrangements with creditors
and members -
(1) Where a compromise 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;
the Court may, on
the application of the company or of any creditor or member of the company, or,
in the case of a company which is being wound up, of the liquidator, order a
meeting of the creditors or class of creditors, or of the members or class of
members, as the case may be, to be called, held and conducted in such manner as
the Court directs.
(2)
If
a majority in number representing three-fourths in value of the creditors, or
class of creditors, or members, or class of members, as the case may be,
present and voting either in person or, where proxies are allowed under Act 65
of 1960, section 151, by proxy, at the meeting, agree to any compromise or
arrangement, the compromise or arrangement shall, if sanctioned by the Court,
be binding on all the creditors, all the creditors of the class, all the
members, or all the members of the class as the case may be, and also on the
company, or in the case of a company which is being wound up, on the liquidator
and contributories of the company:
[Provided that no
order sanctioning any compromise or arrangement shall be made by the Court
unless the Court is satisfied that the company or any other person by whom an
application has been made under sub-section (1) has disclosed to the Court, by
affidavit or otherwise, all material facts relating to the company, such as the
latest financial position of the company, the latest auditor’s report on the
accounts of the company, the pendency of any investigation proceedings in
relation to the company under sections 235 to 251, and the like].
(3)
An
order made by the Court under sub-section (2) shall have no effect until a
certified copy of the order has been filed with the Registrar.
(4)
A
copy of every such order shall be annexed to every copy of the memorandum of
the company issued after the certified copy of the order has been filed as
aforesaid, or in the case of a company not having a memorandum, to every copy
so issued of the instrument constituting or defining the constitution of the
company.
(5)
If
default is made in complying with sub-section (4), the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to one hundred rupees for each copy in respect of which default is
made.
(6)
The
Court may, at any time after an application has been made to it under this
section, stay the commencement or continuation of any suit or proceeding
against the company on such terms as the Court thinks fit, until the
application is finally disposed of.
(7)
An
appeal shall lie from any order made by a Court exercising original
jurisdiction under this section to the Court empowered to hear appeals from the
decisions of the Court, or if more than one Court is so empowered, to the Court
of inferior jurisdiction.
392.
Power of Tribunal to enforce compromise and arrangement
-
(1)
Where
the Tribunal makes an order under section 391 sanctioning a compromise or an
arrangement in respect of a company, it -
(a)
shall
have power to supervise the carrying out of the compromise or an arrangement;
and
(b)
may,
at the time of making such order or at any time thereafter, give such
directions in regard to any matter or make such modifications in the compromise
or arrangement as it may consider necessary for the proper working of the
compromise or arrangement.
(2)
If
the Tribunal aforesaid is satisfied that a compromise or an arrangement
sanctioned under section 391 cannot be worked satisfactorily with or without
modifications, it may, either on its own motion or on the application of any
person interested in the affairs of the company, make an order winding up the
company, and such an order shall be deemed to be an order made under section
433 of this Act.
(3)
The
provisions of this section shall, so far as may be, also apply to a company in
respect of which an order has been made before the commencement of the
Companies (Second Amendment) Act, 2002 sanctioning a compromise or an
arrangement.
393.
Information as to compromises or arrangements with
creditors and members: -
(1)
Where
a meeting of creditors or any class of creditors, or of members or any class of
members, is called under section 391 -
(a)
with
every notice calling the meeting which is sent to a creditor or member, there
shall be sent also a statement setting forth the terms of the compromise or
arrangement and explaining its effect, and in particular, stating material
interests of the directors, managing director or manager of the company,
whether in their capacity as such or as members or creditors of the company or
otherwise, and the effect on those interests, of the compromise or arrangement,
if, and in so far as, it is different from the effect on the like interests of
other persons; and
(b)
in
every notice calling the meeting which is given by the advertisement, there
shall be included either such a statement as aforesaid or a notification of the
place at which and the manner in which creditors or members entitled to attend
the meeting may obtain copies of such a statement as aforesaid.
(2)
Where
the compromise or arrangement affects the rights of debenture holders of the
company, the said statement shall give the like information and explanation as
respects the trustees of any deed for securing the issue of the debentures as
it is required to give as respects the company’s directors.
(3)
Where
a notice given by advertisement includes a notification that copies of a
statement setting forth the terms of the compromise or arrangement proposed and
explaining its effect can be obtained by creditors or members entitled to
attend the meeting, every creditor or member so entitled shall, on making an
application in the manner indicated by the notice, be furnished by the company,
free of charge, with a copy of the statement.
(4)
Where
default is made in complying with any of the requirements of this section, the
company, and every officer of the company who is in default, shall be
punishable with fine which may extend to fifty thousand rupees and for the
purpose of this sub-section any liquidator of the company and any trustee of a
deed for securing the issue of debentures of the company shall be deemed to be
an officer of the company:
Provided that a
person shall not be punishable under this sub-section if he shows that the
default was due to the refusal of any other person, being a director, managing
director, manager or trustee for debenture holders, to supply the necessary
particulars as to his material interests.
(5)
Every
director, managing director, or manager of the company, and every trustee for
debenture holders of the company, shall give notice to the company of such
matter relating to himself as may be necessary for the purposes of this
section; and if he fails to do so, he shall be punishable with fine which may
extend to five thousand rupees.
394.
Provisions for facilitating reconstruction and
amalgamation of companies -
(1)
Where
an application is made to the Tribunal under section 391 for the sanctioning of
a compromise or arrangement proposed between a company and any such persons as
are mentioned in that section, and it is shown to the Tribunal.
(a)
that
the compromise or arrangement has been proposed for the purposes of, or in
connection with, a scheme for the reconstruction of any company or companies,
or the amalgamation of any two or more companies; and
(b)
that
under the scheme the whole or any part of the undertaking, property, or
liabilities of any company concerned in the scheme (in this section referred to
as a “transferor company”) is to be transferred to another company (in this
section referred to as the “transferee company”):
The Tribunal may,
either by the order sanctioning the compromise or arrangement or by a
subsequent order, make provision for all or any of the following matters: -
(i)
the transfer to the transferee company of the whole
or any part of the undertaking, property or liabilities of any transferor
company;
(ii)
the allotment or appropriation by the transferee
company of any shares, debentures, policies, or other like interests in that
company which, under the compromise or arrangement are to be allotted or
appropriated by that company to or for any person;
(iii)
the continuation by or against the transferee
company of any legal proceedings pending by or against any transferor company;
(iv)
the dissolution, without winding up, of any
transferor company;
(v)
the provisions to be made for any person who,
within such time and in such manner as the tribunal directs, dissent from the
compromise or arrangement; and
(vi)
such incidental, consequential and supplemental
matters as are necessary to secure that the reconstruction or amalgamation
shall be fully and effectively carried out.
Provided that no
compromise or arrangement proposed for the purposes of, or in connection with,
a scheme for the amalgamation of a company, which is being wound up, with any
other company or companies, shall be sanctioned by the Tribunal unless the
Tribunal has received a report form the Registrar that the affairs of the
company have not been conducted in a manner prejudicial to the interests of its
members or to public interest:
Provided further
that no order for the dissolution of any transferor company under clause (iv)
shall be made by the Tribunal unless the Official Liquidator has, on scrutiny
of the books and papers of the company, made a report to the Tribunal that the
affairs of the company have not been conducted in a manner prejudicial to the
interests of its members or to public interest.
(2)
Where
an order under this section provides for the transfer of any property or
liabilities, then, by virtue of the order, that property shall be transferred
to and vest in, and those liabilities, shall be transferred to and become the
liabilities of, the transferee company; and in the case of any property, if the
order so directs, freed from any charge which is, by virtue of the compromise
or arrangement, to cease to have effect.
(3)
Within
thirty days after the making of an order under this section, every company in
relation to which the order is made shall cause a certified copy thereof to be
filed with the Registrar for Registration.
If default is made
in complying with this sub-section, the company, and every officer of the
company who is in default, shall be punishable with fine which may extend to
five hundred rupees.
(4)
In
this section -
(a)
“Property”
includes property, rights and power of every description; and “liabilities”
includes duties of every description; and
(b)
“transferee
company” does not include any company other than a company within the meaning
of this Act; but “transferor company” includes any body corporate, whether a
company within the meaning of this Act or not.
394A. Notice to be given to Central Government
for applications under section 391 and 394 - The Tribunal shall give notice
of every application made to it under section 391 or 394 to the Central
Government and shall take into consideration the representations, if any, made
to it by that Government before passing any order under any of these sections.
395. Power and duty to acquire shares of
shareholders dissenting from scheme or contract approved by majority
(1) Where a scheme or
contract involving the transfer of shares or any class of shares in a company
(in this section referred to as "the transferor company") to another
company (in this section referred to as "the transferee company"),
has, within four months after the making of the offer in that behalf by the
transferee company, been approved by the holders of not less than nine-tenths
in value of the shares whose transfer is involved (other than shares already
held at the date of the offer by, or by a nominee for, the transferee company
or its subsidiary) the transferee company may, at any time within two months
after the expiry of the said four months, give notice in the prescribed manner140
to any dissenting shareholder, that it desires to acquire his shares; and when
such a notice is given, the transferee company shall, unless, on an application
made by the dissenting shareholder within one month from the date on which the
notice was given, the Court thinks fit to order otherwise, be entitled and
bound to acquire those shares on the terms on which, under the scheme or
contract, the shares of the approving shareholders are to be transferred to the
transferee company:
Provided that
where shares in the transferor company of the same class as the shares whose
transfer is involved are already held as aforesaid to a value greater than
one-tenth of the aggregate of the values of all the shares in the company of
such class, the foregoing provisions of this sub-section shall not apply,
unless-
(a) the transferee
company offers the same terms to all holders of the shares of that class (other
than those already held as aforesaid) whose transfer is involved; and
(b) the holders who
approve the scheme or contract, besides holding not less than nine-tenths in
value of the shares (other than those already held as aforesaid) whose transfer
is involved, are not less than three-fourths in number of the holders of those
shares.
(2) Where, in pursuance
of any such scheme or contract as aforesaid, shares, or shares of any class, in
a company are transferred to another company or its nominee, and those shares
together with any other shares or any other shares of the same class, as the
case may be, in the first-mentioned company held at the date of the transfer
by, or by a nominee for, the transferee company or its subsidiary comprise
nine-tenths in value of the shares, or the shares of that class, as the case
may be, in the first-mentioned company, then,-
(a) the transferee
company shall, within one month from the date of the transfer (unless on a
previous transfer in pursuance of the scheme or contract it has already
complied with this requirement), give notice of that fact in the prescribed
manner to the holders of the remaining shares or of the remaining shares of
that class, as the case may be, who have not assented to the scheme or
contract, and
(b) any such holder may,
within three months from the giving of the notice to him, require the
transferee company to acquire the shares in question;
and where a
shareholder gives notice under clause (b) with respect to any shares, the
transferee company shall be entitled and bound to acquire those shares on the
terms on which, under the scheme or contract, the shares of the approving
shareholders were transferred to it, or on such other terms as may be agreed,
or as the Court on the application of either the transferee company or the
shareholder thinks fit to order.
(3) Where a notice has
been given by the transferee company under subsection (1) and the Court has
not, on application made by the dissenting shareholder, made an order to the
contrary, the transferee company shall, on the expiry of one month from the
date on which the notice has been given, or, if an application to the Court by
the dissenting shareholder is then pending, after that application has been
disposed of, transmit a copy of the notice to the transferor company together
with an instrument of transfer executed on behalf of the shareholder by any person
appointed by the transferee company and on its own behalf by the transferee
company, and pay or transfer to the transferor company the amount or other
consideration representing the price payable by the transferee company for the
shares which, by virtue of this section, that company is entitled to acquire;
and 141[the transferor company shall-
(a) thereupon register
the transferee company as the holder of those shares, and
(b) within one month of
the date of such registration, inform the dissenting shareholders of the fact
of such registration and of the receipt of the amount or other consideration
representing the price payable to them by the transferee company:]
Provided that an
instrument of transfer shall not be required for any share for which a share
warrant is for the time being outstanding.
(4) Any sums received by
the transferor company under this section shall be paid into a separate bank
account, and any such sums and any other consideration so received shall be
held by that company in trust for the several persons entitled to the shares in
respect of which the said sums or other considerations were respectively
received.
(4A) (a) The following provisions shall apply
in relation to every offer of a scheme or contract involving the transfer of
shares or any class of shares in the transferor company to the transferee
company, namely:-
(i) every such offer or
every circular containing such offer or every recommendation to the members of
the transferor company by its directors to accept such offer shall be
accompanied by such information as may be prescribed143;
(ii) every such offer
shall contain a statement by or on behalf of the transferee company, disclosing
the steps it has taken to ensure that necessary cash will be available;
(iii) every circular
containing or recommending acceptance of, such offer shall be presented to the
Registrar for registration and no such circular shall be issued until it is so
registered;
(iv) the Registrar may
refuse to register any such circular which does not contain the information
required to be given under sub-clause (i) or which sets out such information in
a manner likely to give a false impression; and
(v) an appeal shall lie
to the Court against an order of the Registrar refusing to register any such
circular.
(b) Whoever issues a
circular referred to in sub-clause (iii) of clause (a) which has not been
registered, shall be punishable with fine which may extend to 20A[five
thousand rupees].]
(5) In
this section
(a) "dissenting
shareholder" includes a shareholder who has not assented to the scheme or
contract and any shareholder who has failed or refused to transfer his shares
to the transferee company in accordance with the scheme or contract;
(b) "transferor
company" and "transferee company" shall have the same meaning as
in section 394.
(6) In relation to an
offer made by the transferee company to shareholders of the transferor company
before the commencement of this Act, this section shall have effect.-
(a) with the
substitution, in sub-section (1), for the words "the shares whose transfer
is involved (other than shares already held at the date of the offer by, or by
a nominee for, the transferee company or its subsidiary)," of the words
"the shares affected" and with the omission of the proviso to that
sub-section;
(b) with the omission of sub-section (2);
(c) with the omission in
sub-section (3) of the words "together with an instrument of transfer
executed on behalf of the shareholder by any person appointed by the transferee
company and on its own behalf by the transferee company" and of the
proviso to that sub-section; and
(d) with the omission of clause (b) of
sub-section (5).
396. Power of Central Government to provide
for amalgamation of companies in national interest
(1) Where the Central
Government is satisfied that it is essential in the 144[public
interest] that two or more companies should amalgamate, then, notwithstanding
anything contained in section 394 and 395 but subject to the provisions of this
section, the Central Government may, by order notified in the Official Gazette,
provide for the amalgamation of those companies into a single company with such
constitution; with such property, powers, rights, interest, authorities and
privileges; and such liabilities, duties, and obligations; as may be specified
in the order.
(2) The order aforesaid
may provide for the continuation by or against the transferee company of any
legal proceedings pending by or against may transferor company and may also
contain such consequential, incidental and supplemental provisions as may, in
the opinion of the Central Government, be necessary to give effect to the
amalgamation.
(3) Every member or
creditor (including a debenture holder) of each of the companies before the
amalgamation shall have, as nearly as may be, the same interest in or rights
against the company resulting from the amalgamation as he had in the company of
which he was originally a member or creditor; and to the extent to which the
interest or rights of such member or creditor in or against the company resulting
from the amalgamation are less than his interest in or rights against the
original company, he shall be entitled to compensation which shall be assessed
by such authority as may be prescribed and every such assessment shall be
published in the Official Gazette.
The compensation
so assessed shall be paid to the member or creditor concerned by the company
resulting from the amalgamation.
(3A)Any person aggrieved by any assessment of compensation made by the
prescribed authority under sub-section (3) may, within thirty days from the
date of publication of such assessment in the Official Gazette, prefer an
appeal to the Company Law Board and thereupon the assessment of the
compensation shall be made by the Company Law Board.
(4) No order shall be made under this
section, unless-
(a) a copy of the
proposed order has been sent in draft to each of the companies concerned;
(aa) the time for
preferring an appeal under sub-section (3A) has expired, or where any such
appeal has been preferred, the appeal has been finally disposed of; and
(b) the central
Government has considered, and made such modifications, if any, in the draft
order as may seem to it desirable in the light of any suggestions and
objections which may be received by it from any such company within such period
as the Central Government may fix in that behalf, not being less than two
months from the date on which the copy aforesaid is received by that company,
or from any class of shareholders therein, or from any creditors or any class
of creditors thereof.
(5) Copies of every order
made under this section shall, as soon as may he after it has been made, be
laid before both Houses of Parliament.
396A.
Preservation of books and papers of amalgamated company
The books and
papers of a company which has been amalgamated with, or whose shares have been
acquired by, another company under this Chapter shall not be disposed of
without the prior permission, of the Central Government and before granting
such permission, that Government may appoint a person to examine the books and
papers or any of them for the purpose of ascertaining whether they contain any
evidence of the commission of an offence in connection with the promotion or
formation, or the management of the affairs, of the first-mentioned company or
its amalgamation or the acquisition of its shares.
TEXT OF
RELEVANT RULES FROM THE COMPANIES
(COURT) RULES, 1959
Compromise or
Arrangement under section 391 and 394
68.
Summons for directions to convene a meeting
An
application under section 391(1) for an order convening a meeting of creditors
and / or members or any class of them shall be by a Judge’s summons supported
by an affidavit. A copy of the proposed compromise or arrangement shall be
annexed to the affidavit as an exhibit thereto. Save as provided in rule 68
hereunder, the summons shall be moved ex parte. The summons shall be in Form
No. 33, and the affidavit in support thereof in Form No. 34.
69.
Service on company
Where
the company is not the applicant, a copy of the summons and of the affidavit
shall be served on the company, or, where the company is being wound-up, on its
liquidator, not less than 14 days before the date fixed for the hearing of the
summons.
70.
Directions at hearing of summons
Upon the hearing of the summons or any
adjourned hearing thereof, the Judge shall, unless he thinks fit for any reason
to dismiss the summons, give such directions as he may think necessary in
respect of the following matters: -
(1)
determining
the class or classes of creditors and/or of members whose meeting or meetings
have to be held for considering the proposed compromise or arrangement;
(2)
fixing
the time and place of such meeting or meetings;
(3)
appointing
a Chairman or Chairmen for the meeting or meetings to be held, as the case may
be;
(4)
fixing
the quorum and the procedure to be followed at the meeting or meetings,
including voting by proxy;
(5)
determining
the values of the creditors and / or the members, or the creditors or members
of any class, as the case may be, whose meetings have to be held;
(6)
notice
to be given of the meeting or meetings and the advertisement of such notice;
(7)
the
time within which the Chairman of the meeting is to report to the Court the
result of the meetings; and such other matters as the Court may deem necessary.
The order made on
the summons shall be in Form No. 35 with such variations as may be necessary.
71.
Proxies
(1) Voting by proxy shall be permitted,
provided a proxy in the prescribed form duly signed by the person entitled to
attend and vote at the meeting is filed with the company at its registered
office not later than 48 hours before the meeting.
(2)
Where
a body corporate which is a member or creditor (including holder of debentures)
of a company authorizes any person to act as its representative at the meeting
of the members or creditors of the company, or of any class of them, as the
case may be, a copy of the resolution of the Board of Directors or other
governing body of such body corporate authorizing such person to act as its
representative at the meeting, and certified to be a true copy by a director,
the manager, the secretary, or other authorized officer of such body corporate,
shall be lodged with the company at its registered office not later than 48
hours before the meeting.
(3)
Rules
227 to 229 of these rules relating to proxies shall also apply to proxies
lodged under this rule.
72.
Application for stay
An
application under sub-section (6) of section 391 for stay of the commencement
or continuation of any suit or proceeding against the company may be moved by a
Judge’s summons ex parte, provided that where a petition for winding-up the
company or a petition under section 397 or 398 is pending, notice of the
application shall be given to the petitioner in such petition.
73.
Application to vacate or vary order of stay
Where
an order has been made staying the commencement or continuation of any suit or
proceeding under sub-section (6) of section 391, any person aggrieved by such
order may apply to the Court by a Judge’s summons to vacate or vary such order.
Notice of the application shall be given to the applicant at whose instance the
order of stay was made and to such other persons as the Court may direct.
74.
Notice of meeting
The notice of
meeting to be given to the creditors and / or members, or to the creditors or
members of any class, as the case may be, shall be in Form No. 36, and shall be
sent to them individually by the Chairman appointed for the meeting, or, if the
Court so directs, by the company (or its Liquidator), or any other person as
the Court may direct, by post under certificate of posting to their last known
address not less than 21 clear days before the date fixed for the meeting. It
shall be accompanied by a copy of the proposed compromise or arrangement and of
the statement required to be furnished under section 393, and a form of proxy
in Form No. 37.
75.
Advertisement of the notice of meeting
The notice of the
meeting shall be advertised in such newspapers and in such manner as the Judge
may direct, not less than 21 clear days before the date fixed for the meeting.
The advertisement shall be in Form No. 38.
76.
Copy of compromise or arrangement to be furnished by
the company
Every
creditor or member entitled to attend the meeting shall be furnished by the
company, free of charge and within 24 hours of a requisition being made for the
same with a copy of the proposed compromise or arrangement together with a
copy, of the statement required to be furnished under section 393, unless the
same had been already furnished to such member or creditor.
77.
Affidavit of service - The Chairman appointed for the
meeting or the Company or other person directed to issue the advertisement and
the notices of the meeting shall file an affidavit not less than 7 days before
the date fixed for the holding of the meeting or the holding of the first of
the meetings as the case may be, showing that the directions regarding the
issue of notices and the advertisement have been duly complied with. In default
thereof, the summons shall be posted before the Judge for such orders as he may
think fit to make.
78.
Result of the meeting to be decided by poll
The
decisions of the meeting or meetings held in pursuance of the order made under
rule 69 on all resolutions shall be ascertained only by taking a poll.
79.
Report of the result of the meeting
The Chairman of the
meeting, (or where there are separate meetings, the Chairman of each meeting)
shall, within the time fixed by the Judge, or where no time has been fixed,
with seven days after conclusion of the meeting, report the result thereof to
the Court. The report shall state accurately the number of creditors or class
of creditors or the number of members or class of members, as the case may be,
who were present and who voted at the meeting either in person or by proxy,
their individual values and the way they voted. The report shall be in Form No.
39.
80.
Petition for confirming compromise or arrangement
Where the proposed
compromise or arrangement is agreed to, with or without modification, as
provided by sub-section (2) of section 391, the company, (or its liquidator, as
the case may be) shall within 7 days of the filing of the report by the
Chairman, present a petition to the Court for confirmation of the compromise or
arrangement. The petition shall be in Form No. 40.
Where a compromise
or arrangement is proposed for the purposes of or in connection with a scheme
for the reconstruction of any company or companies, or for the amalgamation of
any two or more companies, the petition shall pray for appropriate orders and
directions under section 394.
Where the company
fails to present the petition for confirmation of the compromise or arrangement
as aforesaid, it shall be open to any creditor or contributory as the case may
be, with the leave of the Court, to present and the company shall be liable for
the costs thereof.
Where no petition
for confirmation of the compromise or arrangement is presented, or where the
compromise or arrangement has not been approved by the requisite majority under
section 391(2) and consequently no petition for confirmation could be
presented, the report of the Chairman as to the result of the meeting made
under the preceding rule shall be placed for consideration before the Judge for
such orders as may be necessary.
81.
Date and notice of hearing
The Court shall fix
a date for the hearing of the petition, and notice of the hearing shall be
advertised in the same papers in which the notice of the meeting was
advertised, or in such other papers as the Court may direct, not less than 10
days before the date fixed for the hearing.
82.
Order on petition
Where the Court
sanctions the compromised or arrangement, the order shall include such
directions in regard to any matter and such modifications in the compromise or
arrangement as the Judge may think fit to make for the proper working of the
compromise or arrangement. The order shall direct that a certified copy of the
same shall be filed with the Registrar of Companies within 14 days from the
date of the order, or such other time as may be fixed by the Court. The order
shall be in Form No. 41, with such variations as may be necessary.
83.
Application for directions under section 394
Where the
compromise or arrangement has been proposed for the purposes of or in
connection with a scheme for the reconstruction of any company or companies or
the amalgamation of any two or more companies, and the matters involved cannot
be dealt with or dealt with adequately on the petition for sanction of the
compromise or arrangement, an application shall be made to the Court under
section 394, by a summons supported by affidavit, for directions of the Court
as to the proceedings to be taken. Notice of the summons shall be given in such
manner and to such persons as the Court may direct.
84.
Directions at hearing of applications
Upon the hearing of
the summons or upon any adjourned hearing thereof the Court may make such order
or give such directions as it may think fit, as to the proceedings to be taken
for the purpose of the reconstruction or amalgamation, as the case may be,
including, where necessary, an inquiry as to the creditors of the transferor
company and the securing of the debts and claims of any of the dissenting
creditors in such manner as to the Court may seem just.
85.
Order under section 394
An order made under
section 394 shall be in Form No. 42 with such variation as the circumstances
may require.
86.
Compromise or arrangement involving reduction of
capital
Where a proposed
compromise or arrangement involves a reduction of capital of the company, the
procedure prescribed by the Act and these Rules relating to the reduction of
capital, and the requirement of the Act and these Rules in relation thereto,
shall be complied with, before the compromise or arrangement so far as it
relates to reduction of capital, is sanctioned.
87.
Report on working of compromise or arrangement
At any time after
the passing of the order sanctioning the compromise or arrangement, the Court
may, either of its own motion or the application of any person interested, make
an order directing the company, or, where the company is being wound-up, the
liquidator, to submit to the Court within such time as the Court, may fix, a
report on the working of the said compromise or arrangement. On a consideration
of the report, the Court may pass such orders or give such directions as it may
think fit.
88.
Liberty to apply
(1) The Company, or any creditor or
member thereof, or in case of a company which is being wound-up, the
liquidation, may, at any time after the passing of the order sanctioning the
compromise or arrangement, apply to the Court for the determination of any
question relating to the working of the compromise or arrangement.
(2)
The
application shall in the first instance be posted before the Court for
directions as to the notices and the advertisement, if any to issue, as the
Court may direct.
(3)
The
Court may, on such application, pass such orders and give such directions as it
may think fit in regard to the matter, and may make such modifications in the
compromise or arrangement as it may consider necessary for the proper working
thereof, or pass such orders as it may think fit in the circumstances of the
case.
227. Minor
not to be appointed proxy
No person shall be
appointed as a general or special proxy who is a minor.
228.
Filing in proxy where creditor or contributory is blind
or incapable
–
The proxy of a
creditor or a contributory blind or incapable of writing may be accepted if such creditor or a
contributory has attached his signature or mark
thereto in the presence of a witness who shall add to his signature, his description and address:
Provided that all
insertions in the proxy are in the hand-writing of the witness and such witness
shall have certified at the foot of the proxy that all such insertions have
been made by him at the request and in the presence of the creditor or
contributory before he attached his signature or mark.
229. Proxy of person not acquainted with
English
The proxy of a
creditor or contributory who does not know English may be accepted if it is
executed in the manner prescribed in the last preceding rule and the witness
certifies that it was explained to the creditor or contributory in the language
known to him, and gives the creditor’s or contributory’s name in English below
the signature.
FORM No. 31
(See rule 65)
[Heading as in
Form No. 1]
Company Petition
No…......... of 20…....
A. B. & Co.
Ltd. – Petitioner
Form of minute
The capital of A. B. & Co., Ltd. is henceforth
Rs…..... divided into ............. shares of Rs….....each, reduced from
Rs…..... divided into …......... shares of Rs…..... each. At the date of the
registration of this minute, …......... shares numbered …......... etc., have
been issued and are deemed to be fully paid [and the remaining ….........
shares are unissued].
[Note.—1. The words
'and reduced' are to be added only where the order so directs.]
2. If all the shares of
a class are not issued, the minute should state the serial numbers of the
issued shares. Partly paid shares should also be distinguished by their serial
numbers and the amounts paid thereon should be stated. The serial numbers of
shares with calls in arrears and of forfeited shares should also be stated.
FORM No. 32
(See rule 65)
[Heading as in
Form No. 1]
Company Petition
No …......... of 20…...
A. B. & Co.
Ltd. – Petitioner
Notice of registration
of order and minute
Notice is hereby given that the order of the High
Court at …......... (or the district court of …........) dated the ….........
19…...., confirming the reduction of the capital of the above-named company
from Rs…..... divided into …......... shares of Rs…..... each, to Rs….....
divided into …......... shares of Rs…..... each and the minute approved by the
court showing, with respect to the share capital of the above company as
altered, the several particulars required by the above Act, were registered by
the Registrar of Companies on the …......... day of …......... 19…....
Dated ….........
(Sd.)
….................……….
Advocate for the
Company
FORM No. 33
(See rule 67)
[Heading as in
Form No. 1]
Company
Application No …......... of 19…....
….............
Applicant(s)
Summons for
directions to convene a meeting under section 391
Let all parties concerned attend the Judge in
Chambers on …......... (day), the …............ day of …......... 19….... at
…......... o'clock in the …......... noon on the hearing of an application of
the above named company (or of the applicant(s) above-named) for an order that
a meeting (or separate meetings) be held at …......... of [here enter the
creditors or class of creditors e.g., debenture holders other secured
creditors, unsecured creditors, etc., or the members or class of members e.g.,
preference shareholders, equity shareholders, etc. of which class or classes,
the meetings have to be held] of the above company, for the purpose of considering,
and if thought fit, approving, with or without modification, a scheme of
compromise or arrangement proposed to be made between the company and the said
[here mention the creditors or class of creditors or members, or the class of
members] of the said company.
And that directions may be given as to the method
of convening, holding. and conducting the said meeting(s) and as the notices
and advertisements to be issued.
And that a Chairman (or Chairmen) may be appointed
of the said meeting(s), who shall report the result thereof to the Court.
Advocate for the applicant(s)
Registrar
The affidavit of …......... will be used in support
of the summons.
[Note.—Where the company is not the applicant, the
summons should be served on the company, or where it is being wound-up, on its
liquidator].
FORM No. 33
(See rule 67)
[Heading as in
Form No. 1]
Company
Application No …......... of 20…....
….............
Applicant(s)
Summons for
directions to convene a meeting under section 391
Let all parties concerned attend the Judge in
Chambers on …......... (day), the …............ day of …......... 19….... at
…......... o'clock in the …......... noon on the hearing of an application of
the above named company (or of the applicant(s) above-named) for an order that
a meeting (or separate meetings) be held at …......... of [here enter the
creditors or class of creditors e.g., debenture holders other secured
creditors, unsecured creditors, etc., or the members or class of members e.g.,
preference shareholders, equity shareholders, etc. of which class or classes,
the meetings have to be held] of the above company, for the purpose of
considering, and if thought fit, approving, with or without modification, a
scheme of compromise or arrangement proposed to be made between the company and
the said [here mention the creditors or class of creditors or members, or the
class of members] of the said company.
And that directions may be given as to the method
of convening, holding. and conducting the said meeting(s) and as the notices
and advertisements to be issued.
And that a Chairman (or Chairmen) may be appointed
of the said meeting(s), who shall report the result thereof to the Court.
Advocate for the applicant(s)
Registrar
The affidavit of …......... will be used in support
of the summons.
[Note.—Where the company is not the applicant, the
summons should be served on the company, or where it is being wound-up, on its
liquidator].
FORM No. 34
(See rule 67)
[Heading as in
Form No. 1]
Company
Application No …......... of 19…....
….............
Applicant(s)
Affidavit in
support of summons
I, …......... Of etc., solemnly affirm and say as
follows:—
1. I am the managing
director / secretary/a director/ …........./of the said company, (or an auditor
of the said company authorised by the directors to make this affidavit, or
liquidator of the said company in liquidation).
[where the
application is not by the company or its liquidator, but by a member or
creditor the above paragraph should be suitably altered].
2. The company was
incorporated on …......... 19….... The document now produced and shown to me is
printed copy of the memorandum and articles of association of the said company,
and also contains copies of all the special resolutions which have been passed
and are now in force.
3. The registered
office of the company is situate at ….........
4. The capital of the
company is rs…..... Divided into …......... [here set out the classes of shares
issued and the amounts paid up on each share].
5. The objects of the
company are set out in the memorandum of association annexed hereto. They are
briefly (here set out the main objects in brief).
6. The company
commenced the business of …......... (e.g. Hides and skins. Etc.,) and has been
carrying on the same since ….........
7. [here set out in separate paragraphs the circumstances that have
necessitated the proposed compromise or arrangement, the objects sought to be
achieved by it, the terms of the compromise or arrangement, and the effect, if
any, of the compromise or arrangement on the material interests of the
directors, managing director, 2[***]
or the manager of the company, and were the compromise or arrangement affects
the interests of the debentures holders, its effect on the material interests
of the trustees of the debenture truest deed. A copy of the proposed compromise
or arrangement should be marked as an exhibit and annexed to the affidavit.]
8. [here set out the
class of creditors or members with whom the compromise or arrangement is to be
made; where the arrangement is between the company and its members, it should
be stated whether any creditors or class of creditors are likely to be affected
by it].
9. It is necessary that
a meeting (or meetings) of the creditors/members (if the meeting is to be only
of a class of creditors or a class of members, it should be so stated) should
be called to consider and approve the proposed compromise or arrangement.
10. It is suggested that
the meeting (or meetings) may be held at the premises of the registered office
of the company or at such other place as may be determined by the court, and on
such date(s) and at such time(s) as this court may direct; and that a chairman
may be appointed for the meeting (or for each of the meetings) to be held.
11. It is suggested that
notice of the proposed compromise or arrangement and of the meeting may be
published once in (here set out the newspapers) and in such manner as the court
may direct.
12. It is prayed that
necessary directions may be given as to the issue and publication of notices
and the convening, holding and conducting of the meeting(s) proposed above.
Solemnly affirmed, etc.
(sd.) X. Y ….....................
Before me
(sd.) ….....................
Commissioner for oaths
FORM
No. 35
(See rule 69)
[Heading as in Form No. 1]
Company Application No …......... of 19 …...
…..................... Applicant(s)
Before the Hon'ble Mr. Justice ….....................
Dated ….........
Order on summons
for directions
Upon the application of the above-named company*
(or, the applicant(s) above named) by summons dated the …......... day of
…......... 19….... , upon hearing Shri …......... advocate for the company [Or
(where the company is not the applicant) upon hearing the advocate for the
applicant(s) and the advocate for the Company], and upon reading the affidavit
of …......... filed the …......... day of …................ 19….. , and the
exhibits therein referred to (Exhibit …......... being a copy of the proposed
compromise or arrangement).
IT IS ORDERED:
That a meeting (or, separate meeting as hereinafter
set out) of (here set out the class or classes of creditors and /or members of
whom the meeting or meetings have to be held), of above company shall be
convened and held at …......... on …......... (day), the …......... day of
…......... 19…...., at .......... o'clock in the …... noon, for the
purpose of considering, and if thought fit, approving, with or without
modifications, the compromise or arrangement proposed to be made between the
said company and (here set out the class or classes of creditors or members as
the case may be) of the said company.
[Note.—If separate meetings of different classes of
creditors and/or members are to be held, state the date, time and place of each
of such meetings as fixed by the Judge, in separate paragraphs.]
That at least 21 clear days before the day
appointed for the meeting (or the first of the meetings, an advertisement
convening the same and stating that copies of the said compromise or
arrangement and of the statement required to be furnished pursuant to section
393 and forms of proxy can be obtained free of charge at the registered office
of the company or at the office of its advocate, be inserted once in the
…......... Gazette and once in each of (here set out the newspaper or
newspapers).
That, in addition, at least 21 clear days before
the meeting (or the first of the meetings) to be held as aforesaid, a notice
convening the said meeting at the place and time aforesaid, together with a
copy of the said compromise or arrangement, a copy of the statement required to
be sent under section 393, and the prescribed Form of proxy, shall be sent by
pre-paid letter post under Certificate of posting addressed to each of (here
mention the class or classes of creditors or members whose meeting or meetings
are to be held) at their respective registered or last known addresses.
That the advocate for the company above-named do,
within 3 days from this date file in court the form of the advertisement, the
notice and the statement to accompany the notice, and the same shall be settled
by the Registrar of this Court.
That Shri …....................., and failing him,
Shri …....................., shall be the Chairman of the meeting to be held on
…......... as aforesaid.
That the Chairman appointed for the meeting do issue
the advertisement and send out the notices of the meeting (s) referred to
above.
That the quorum for the said meeting(s) shall be
….................................
That voting by proxy be permitted, provided that a
proxy in the prescribed form duly signed by the person entitled to attend and
vote at the meeting, is filed with the company at its registered office at
…......... not later than 48 hours before the meeting.
That the value of each member or creditor shall be
in accordance with books of the company, and, where the entries in the books
are disputed, the Chairman shall determine the value for purposes of the
meeting.
And it is further ordered that the chairman do
report to this Court the result of the said meeting within ….........days of
the conclusion of the meeting and the said report shall be verified by his
affidavit.
Dated this …......... day of …......... 19…....
(By the Court)
Registrar
Note.—Where separate meetings are to be held, the
provisions should be repeated in respect of each of such meetings.
Note.—Where the Court directs the company or its
Liquidator or any other person to issue the advertisement and notices, suitable
alteration should be made.
*Where the application is by a liquidator of the
company substitute the words 'liquidator of the above company in liquidation'
for the word 'company' wherever necessary.
FORM No. 36
(See rule 73)
[Heading as in
Form No. 1]
Company
Application No …......... of 19…....
…................
Applicant(s)
Notice convening
meeting
To
…...........................
…...........................
Take notice that by an order made on ….........
19…...., the Court has directed that a meeting of (here mention the class of
creditors or members of whom the meeting is to be held) of the company be held
at …......... on the …......... day of …......... 19…..., at …....o'clock, for
the purpose of considering, and if thought fit, approving, with or without
modification, the compromise or arrangement proposed to be made between the
said company and (here mention the class of creditors or members with whom the
compromise or arrangement is to be made) of the company.
Take further notice that in pursuance of the said
order, a meeting of (here mention the class of creditors or members of whom the
meeting is to be held) of the company will be held at …......... on ….........
(Day), the …......... day of …......... 19…...., when you are requested to
attend.
Take further notice that you may attend and vote at
the said meeting in person or by proxy, provided that a proxy in the prescribed
form, duly signed by you, is deposited at the registered office of the company
at …......... not later than 48 hours before the meeting.
This court has appointed Shri ……........... , and
failing him, Shri …..………...., to be the Chairman of the said meeting.
A copy each of the compromise or arrangement, the
statement under section 393 and a form of proxy is enclosed.
Dated this …......... day of …......... 19…....
Chairman appointed for the meeting
(or as the case may be).
[Note.—All alterations made in the form of the
proxy should be initialled.]
FORM No. 37
(See rule 73)
[Heading as in
Form No. 1]
Company
Application No …......... of 19…....
…................
Applicant(s)
Form of proxy
I, the undersigned [an unsecured creditor], of the
above company hereby appoint C.D., of etc., and failing him X. Y., of etc, as
my proxy, to act for me at the meeting of [unsecured creditors] to be held at
…......... on the …......... day of …......... 19….... , at ….. o'clock in the
…......... noon, for the purpose of considering and, If thought fit, approving,
with or without modification, a compromise or arrangement proposed to be made
between the said company and its unsecured creditors] and at such meeting and
any adjournment thereof, to vote for me, and in my name …......... [here, if
'for', insert 'for'; if 'against', insert 'against', and in the latter case,
strike out the words below after 'compromise or arrangement'] the said
compromise or arrangement either with or without modification as my proxy may
approve.
[strike out what is not necessary]
Dated this …......... day of …......... 19…....
Signature ….....................
Address …...................…
FORM No. 38
(See rule 74)
[Heading as in
Form No. 1]
Company
Application No …......... of 19…....
…................
Applicant(s)
Notice convening
meeting of creditors/shareholders, etc.
Notice is hereby given that by an order dated the
…......... 19….... the court has directed a meeting (or, separate meetings) to
be held of [here mention 'debenture holders', or 'first debenture holders' or'
second debentures holders' or' unsecured creditors' or 'secured creditors' or
'preference shareholders' or 'equity shareholders' as the case may be
whose meeting or meetings have to be held] of the said company for the purpose
of' considering, and, if thought fit, approving with or without modification,
the compromise or arrangement proposed to be made between the said company and
(here mention the class of creditors or members with whom the compromise or
arrangement is to be made') of the company aforesaid.
In pursuance of the said order and as directed
therein, further notice is hereby given that a meeting of (here set out the
class of creditors or members whose meeting has to be held) of the said company
will be held at …......... on (day), the …......... day of …......... 19…....,
at …......... o'clock in the …......... noon at which time and place the said
(here mention the class of creditor or members) are requested to attend.
[Where separate meetings of classes of creditors or
members are to be held, set them out separately with the place, date and time
of the meeting in each case.]
Copies of the said compromise or arrangement, and
of the statement under section 393 can be had free of charge at the registered
office of the company or at the office of its advocate Shri
….................... at ….........
Persons entitled to attend and vote at the meeting
( or respective meetings) may vote in person or by proxy, provided that all
proxies in the prescribed form are deposited at the registered office of the
company at …......... not later than 48 hours before the meeting.
Forms of proxy can be had at the registered office
of the Company.
The Court has appointed Shri …......... and failing
him, Shri …........., as Chairman of the said meeting (or several meetings).
The above-mentioned compromise or arrangement, if approved by the meeting, will
be subject to the subsequent approval of the Court.
Dated this …......... day of …......... 19…....
Chairman appointed
for the meeting
(or as the case
may be)
FORM No. 39
(See rule 78)
[Heading as in
Form No. 1]
Company
Application No …......... of 19 …....
…..................
Applicant(s)
Report by
Chairman
I, E.F., the person appointed by this Hon'ble Court
to act as Chairman of the meeting of [the debenture holders or first debenture
holders or second debenture holders or unsecured creditors or secured creditors
or preference shareholders or equity shareholders] of the above-named company,
summoned by notice served individually upon them and by advertisement dated the
…...... day of …......... 19….... and held on the …......... day of
…......... 19….... at…........., do hereby report to this Hon'ble Court as
follows:-
1. The said meeting was
attended either personally or by proxy by (here state the number of creditors
or the class of creditors or the number of members or the class of members as
the case may be, who attended the meeting), of the said company entitled
together to …......... (here mention the total value of the debts, or
debentures, where the meeting was of creditors, and the total number and value
of the shares, where the meeting was of members, of those who attended the
meeting).
2. The compromise or
arrangement was read out and explained by me to the meeting and the question
submitted to the said meeting was whether the (here state the class of
creditors or members, as the case may be) of the said company approved of the
compromise or arrangement submitted to the meeting and agreed thereto.
3. The said meeting was
unanimously of the opinion that the compromise or arrangement should be
approved* and agreed to/or the result of the voting upon the said question as
follows:—
The
under-mentioned [here mention the class of creditors or members who attended
the meeting] voted in favour of the proposed compromise or arrangement being
adopted and carried into effect:—
|
Name of
creditor (or member)
|
Address
|
Value of debt
(or No. of preference or equity shares held)
|
Number of
votes
|
1.
2.
3.
etc.
|
The under-mentioned [Here mention the class of
creditors or members who attended the meeting] voted against the proposed
compromise or arrangement being adopted and carried into effect:—
|
Name of
creditor (or member)
|
Address
|
Value of debt
(or No. of preference or equity shares held)
|
Number of
votes
|
1.
2.
3.
|
Dated this …..................... day of …......... 19…....
(Sd.) E.F.
….....................
Chairman.
* If the compromise or arrangement was approved
with modifications, it should be so stated and the modifications made should be
set out, and also the particulars of the voting on the modifications.
FORM No. 40
(See rule 79)
[Heading as in
Form No. 1]
Company Petition
No …......... of 19…....
connected with
Company
Application No. …......... of 19…....
A. B. & Co.
[Ltd.] in liquidation, by its liquidator*
…..........................
) Petitioner
Petition to
sanction compromise or arrangement
The petition of A. B. & Co. [Lid]., (*in
liquidation, by its liquidator) the petitioner above-named is as follows:—
1. The object of this
petition is to obtain sanction of the Court to compromise or arrangement
whereby (here set out the nature of the compromise or arrangement).
2. The company was
incorporated under the …......... Act …......... with a nominal capital of Rs….....
divided into …......... shares of Rs…..... each, of which …......... shares
were issued and Rs…..... was paid up on each share issued.
3. The objects for
which the company was formed are as set in the company's memorandum of
association. They are in brief (Set out the principal objects).
4. [Here set out the
nature of the business carried on by the company, its financial position and
the circumstances that necessitated the compromise or arrangement and the
benefits sought to be achieved by the compromise or arrangement and its
effect].
5. The
compromise or arrangement was in the following terms :-
[Here set out
the terms of the compromise or arrangement].
6. By an order made in
the above matter on …..…….... 19……, the petitioner was directed to convene a
meeting of [Here set out the class of creditors or members of whom the meeting
was to be held] of the company for the purpose of considering and, if thought
fit, approving, with or without modifications, the said compromise or
arrangement, and the said order directed that E. F., or failing him, X. Y.,
should act as Chairman of the said meeting and should report the result thereof
to this Court.
7. Notice of the
meeting was sent individually to the [Here mention the class of creditors or
members to whom the notice was sent] as required by the order together with a
copy of the compromise or arrangement and of the statement required by section
393 and a form of proxy. The notice of the meeting was also advertised as
directed by the said order in (here set out the newspapers).
8. On
the …......... 19…...., a meeting of (here mention the class of creditors or
members whose meeting was convened) of the company duly convened in accordance
with the said order, was held at …......... and the said E. F., acted as the chairman
of the meeting.
9. The said E. F., has reported the result of the
meeting to this Hon'ble Court.
10. The said meeting was attended by (here set out
the number of the class of creditors or members, as the case may be, who
attended the meeting either in person or by proxy), and the total value of
their [here mention debts, debentures or shares, as the case may be is Rs
…......... [In the case of shares, the total number and value of the shares
should be mentioned. The said compromise or arrangement was read and explained
by the said E. F., to the meeting and it was resolved unanimously [or by a
majority of …......... votes against …......... votes] as follows:—
[Here set out the resolution as passed]
11. The sanctioning of the compromise or arrangement
will be for the benefit of the company.
12. Notice of this petition need not be served on
any person.
The petitioner therefore prays:
(1) That the said compromise or
arrangement may be sanctioned by the Court so as to be binding on all the [here
set out the class of creditors or members of the company on whom the compromise
or arrangement is to be binding] of the said company and on the said company.
(2) Or, such other order may be
made in the premises as to the Court shall seem fit.
Verification, etc.
Petitioner
[Note.—The affidavit in support should verify the petition and prove any
matters not proved in any prior affidavit, such as advertisement, holding of
meetings, posting of notices, copies of compromise or arrangement and proxies,
etc., and should exhibit the report of the Chairman and verify the same.]
Note.—If the company is being wound-up, say so.
Note.—If any modifications were made in the compromise or arrangement at
the meeting they should be set out in separate paragraph.
* To be inserted where the company is being wound-up.
FORM No. 41
(See rule 81 )
[Heading as in
Form No. 1]
Company Petition
No …......... of 19…....
connected with
Company
Application No …......... of 19…....
A. B. & Co., [Ltd.] (*in
liquidation, by its liquidator ) petitioner
Before the Hon'ble Mr.
Justice ….........
Dated ….........
Order on
petition
The above petition coming on for hearing on
…......... upon reading the said petition, the order dated …......... where by
the said company (or, liquidator of' the said company), was ordered to convene
a meeting (or separate meetings) of the creditors/ debenture holders/preference
shareholders/equity shareholders of the above company for the purpose of
considering, and if thought fit, approving with or without modification, the
compromise or arrangement proposed to be made between the said company and
…......... and annexed to the affidavit of …......... filed the …......... day
of' …................... 19…...., the …......... Gazette dated ............ and
the (here mention the newspaper) dated …........ each containing the
advertisement of the said notice convening the said meeting (s) directed to be
held by the said order dated ….............. 19…...., the affidavit of
…......... filed the …......... day of …......... 19…...., showing the
publication and despatch of the notices convening the said meeting(s), the
report(s) of the Chairman/Chairmen of the said meeting(s) (respectively) dated
…......... as to the result of the said meeting(s), (and upon hearing Shri ……………..........
advocate for …......... etc.) and it appearing from the report(s) that the
proposed compromise and arrangement has been approved** …......... (here state
whether unanimously or by a majority of not less than three-fourths in value of
the creditors or class of creditors or members or class of members as the case
may be, present and voting in person or by proxy).
This Court doth hereby sanction the compromise or
arrangement set forth in para ….............. of the petition herein and in the
Schedule hereto, and doth hereby declare the same to be binding on ….........
(here enter the class of creditors or members on whom it is to be binding) of
the above-named company and also on the said company (and its liquidator*)
And this Court doth further order:—
[Here enter any directions given or modifications
made by the Court regarding the carrying out of the compromise or arrangement.]
That the parties to the compromise or arrangement
or other persons interested shall be at liberty to apply to this Court for any
directions that may be necessary in regard to the working of the compromise or
arrangement, and
That the said company [or the liquidator of the
said company] do file with the Registrar of Companies a certified copy of this
order within 14 days from this date.
Schedule
Scheme of compromise or arrangement as sanctioned
by the Court.
Dated this …......... day of …......... 19…....
(By the Court)
Registrar
* To be inserted where the company is being
wound-up.
** Where the compromise or arrangement has been
approved with modifications, it should be so stated.
FORM No. 42
(See rule 84)
[Heading as in
Form No. 1]
Company Petition
No …......... of 19…....
*Application No
…......... of 19…....
……..............
Applicant
Before the
Hon'ble Mr. Justice ….........
Dated ….........
Order under
section 394
Upon the above petition [and application] coming on
for further hearing on …............, upon reading, etc., and upon hearing,
etc.
This Court Doth Order
(1) That all the
property, rights and powers of the transferor company specified in the first,
second and third parts of the Schedule hereto and all the other property,
rights and powers of the transferor company be transferred without further act
or deed to the transferee company and accordingly the same shall pursuant to
section 394(2) of the Companies Act, 19….56, be transferred to and vest in the
transferee company for all the estate and interest of the transferor company
therein but subject to nevertheless to all charges now affecting the same [other
than (here set out any charges which by virtue of the compromise or arrangement
are to cease to have effect)]; and
(2) That all the
liabilities and duties of the transferor company be transferred without further
act or deed to the transferee company and accordingly the same shall pursuant
to section 394(2) of the Companies Act, 1956, be transferred to and become the
liabilities and duties of the transferee company; and
(3) That all proceedings
now pending by or against the transferor company be continued by or against the
transferee company; and
(4) That the transferee
company do without further application allot to such members of the transferor
company as have not given such notice of dissent as is required by clause
…........... of the compromise or arrangement herein the shares in the
transferee company to which they are entitled under the said compromise or
arrangement; and
(5) That the transferor
company do within 14 days after the date of this order cause a certified copy
of this order to be delivered to the Registrar of Companies for registration
and on such certified copy being so delivered the transferor company shall be
dissolved** and the Registrar of Companies shall place all documents relating
to the transferor company and registered with him on the file kept by him in
relation to the transferee company and the files relating to the said two
companies shall be consolidated accordingly; and
(6) That any person
interested shall be at liberty to apply to the Court in the above matter for
any directions that may be necessary.
Schedule
Part I
(Insert a short
description of the freehold property of the transferor company)
Part II
(Insert a short
description of the leasehold property of the transferor company)
Part III
(Insert short
description of all stocks, shares, debentures and other charges in action of
the transferor company)
Dated this …......... day of …......... 19…....
(By the Court)
Registrar
* To be inserted where an application is made.
** Where the Court directs that the transferor company
should be dissolved from any other date, the clause should be altered
accordingly.
