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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 06TH DAY OF NOVEMBER, 2015 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR CO.P.NO. 167/2015 BETWEEN: EYGBS (INDIA) PRIAVE LIMITED REGISTERED OFFICE AT 3RD FLOOR TOWER C, RMZ INFINITY OLD MADRAS ROAD KR PURAM BENGALURU-560016
…PETITIONER (SRI.SAJI.P.JOHN, ADV.)
AND:
NIL
…RESPONDENT
THIS COP IS FILED UNDER 391 TO 394 OF THE COMPANIES ACT, 1956, PRAYING TO THAT THE SCHEME OF AMALGAMATION, ANNEXURE-A HERETO, BE SANCTIONED BY THIS HON’BLE COURT SO AS TO BE BINDING ON THE PETITIONER COMPANY AND TRANSFEROR COMPANY AND THEIR RESPECTIVE SHAREHOLDERS AND CREDITORS AND ETC.,
THIS COP COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:
2 ORDER
Petitioner-company (Transferee) is seeking for sanctioning of scheme of amalgamation with transferor company – EYME Technologies Private Limited. Scheme of amalgamation is at Annexure-A. Petitioner-company came to be incorporated on 26.09.2006 under the name and style indicated in the cause title of petition with the Registrar of Companies, Karnataka and is engaged in the business of providing back office support services, IT enabled services such as data processing support services which includes data analysis and preparation of reports, Financial data complication, Research of data and other supporting services as reflected in the Memorandum and Articles of Association, Annexure-B and its registered office address is as reflected in the cause title of the petition. The authorized, issued, subscribed and paid up share capital is reflected in the paragraph 4 of the petition. Copy of the audited balance sheet made upto 31.03.2015 indicating the assets and liabilities is also produced at annexure-C.
Transferor company came to be incorporated on 12.08.2002 under the provisions of the Companies Act, 1956 and is having its registered office at Trivendrum, Kerala State and its authorized, issued, prescribed and paid up share capital as on 31.03.2015 has been indicated in para 9 of the present petition. The main objects of the transferor company is as set out in the Memorandum and Articles of Association, Annexure- D.
Board of Directors of petitioner-company have approved and adopted the scheme of amalgamation at its meeting held on 30.06.2015. The Board resolution is at Annexure-F.
Petitioner-company had filed an application in C.A.No.817/2015 for dispensation of convening of meeting of its shareholders and creditors for approving the scheme of amalgamation and this Court vide order dated 10.07.2015, as enclosed to the memo dated 23.07.2015, would indicate that same came to be
4 allowed and dispensation of convening of meeting as sought for, was granted.
Notice of present petition was ordered on the Regional Director on 28.03.2015 and petitioner was also directed to take out notice in “The Hindu”, English daily newspaper and “Udayavani”, Kannada daily newspaper and said notice has been duly published. Memo dated 07.08.2015 has been filed enclosing paper publication, which would evidence the fact of publication having been carried as directed by this Court.
Registrar of Companies on behalf of Regional Director, Ministry of Corporate Affairs has filed an affidavit on 08.10.2015 with two following observations stating that: i. No comments or objections have been received from the Income Tax Department in reply to the notice issued by the Regional Director on 10.08.2015; AND
5 ii. The Scheme provides for consideration to be settled by the transferee company either by issue of shares or payment of cash and as such, issue of shares should be on the basis of the exchange ratio determined by the valuer and so far as option of payment of cash by the transferee company being exercised, it should be subject to approval by the Reserve Bank of India under Foreign Exchange Management Act.
Though petitioner has not filed objections to observations, Sri.Saji.P.John, learned counsel appearing for petitioner has drawn the attention of Court to the scheme of amalgamation and particularly to Clause 20.4, whereunder the scheme itself mandates obtaining of approval of Reserve Bank of India under the provisions of Foreign Exchange Management Act, 1999 (FEMA for short). Said clause reads as under.
“20.4 The approval of the Reserve Bank of India, if and to the extent required, being obtained under the provisions of the Foreign Exchange Management Act, 1999 and the regulations thereunder for the
6 payment of cash (including all modes of transfer through banks) to the non-resident shareholders of the Transferor Company in accordance with the provisions of this Scheme.”
Reading of above clause found in the scheme would indicate that same provides for obtaining Reserve Bank of India’s approval under the provisions of FEMA when payment of cash to the non-resident shareholders of the transferor company is undertaken by the transferee company, as such, observations of the Registrar of Companies is met with. Insofar as, observation relating to the issue of shares, the exchange ratio to be determined by the valuer would not arise, inasmuch as, under clause 14.1 the scheme has envisaged the fair value of such shares and said clause reads as under: “The total consideration for merger would be Rs.89,02,92,193. Such consideration will be settled by the Transferee Company by the either issue and allotment of fully paid up class A equity shares of Rs.10/- each or transfer of cash (including all modes of transfer through banks) to the shareholders of the Transferor Company. The proportion of shares and / or cash towards settlement
7 of the consideration will be at the discretion and be determined by the Board of Directors of the Transferee Company on a future date.
Where shares of the Transferee Company are issued, each class A equity share will be issued at Rs.118.97 i.e. the fair value of each class A equity share of the Transferee Company as on the Appointed Date.”
In that view of the matter also, question of determination of exchange ratio to be determined by the valuer, does not arise.
In the light of aforestated facts, this Court is of the considered view that petitioner-company has disclosed the material facts for sanctioning the scheme and there is no impediment in law to withhold such sanction, subject to transferee company obtaining the sanction approval of scheme by the High Court of Kerala. Hence, I proceed to pass the following: ORDER i. COP No.167/2015 is hereby allowed.
ii. Scheme of Amalgamation at Annexure- A is hereby sanctioned which would
8 bind the shareholders, members and creditors of transferee and transferor company and subject to approval and sanction of scheme of transferor company by the High Court of Kerala.
iii. Copy of this order shall be filed before the Registrar of Companies, Karnataka within 30 days from the date of receipt of certified copy of this order.
SD/- JUDGE