appeared that one of the purposes of the scheme was to cover up the misdeeds of

appeared that one of the purposes of the scheme was to cover up the misdeeds of
i ectors.
. MIs. Over-ambitious Consultants Ltd. had in course of its operations over the
rs, acquired various other ventures like plantations and tourism businesses. With a view to consolidate its core business activities, the management decided to hive off its non-core activities by demerging them with an associate company. Advise briefly the steps that the management should take to achieve the purpose of demerger.
[CA. (Final) Nov. 2001]
52Lns. M/ s. Over-ambitious Consultants Ltd. can achieve its purpose of hiving-off its plantations and tourism business activity by demerger process by obtaining the
approval of the High Court as provided in Section 394 of the Companies Act, 1956.
The following steps are to be taken by M/ s Over-ambitious Consultants Ltd. (1) Prepare a Draft Scheme under which the properties and liabilities of the
company comprising of plantations and tourism will be transferred to the associate company known as the transferee company. The consideration for the transfer must be stated in the Scheme (exchange ratio).
(2) An application under Section 391(1) must be made to the Court for an order
convening meetings of creditors and/ or members.
(3) Notice of the meeting must be sent to members/creditors as per the Court's directions. The notice must be accompanied by a statement under section 393(1) setting forth the terms of the compromise or arrangement and explaining its effects, etc.
(4) Hold the general meeting and pass the resolution approving the Draft Scheme of amalgamation subject to confirmation of the High Court. Resolution must be passed by a majority in number representing 3/ 4th in value of the members
as required under Section 391. .
(5) Move the High Court jointly with transferee company for approval of the Scheme and for the purpose supply it with material facts [proviso to Section 391(2)]. The Court shall give notice of the application to the Central Government and shall take into consideration the representation, if any, made by the Government before passing any order (Section 394A).
(6) On receipt of the Court's order, file the certified copy of the order, with the Registrar of Companies within 30 days after the making of the order [Section 394(3)]. Otherwise, it would not be effective.
(7) Proceed to effect the Scheme as per the Scheme of Amalgamation approved
and the directions given by the High court.
~I Answer the following with reference to a scheme of amalgamation of com
~ explaining the relevant provisions of the Companies Act, 1956 :
(i) Whether companies being amalgamated must be companies registered in India.
(ii) What is the majority required for approving the scheme of amalgamation in a
meeting of members of a company called as per directions of the court? Is the
scheme to be approved by preference shareholders?
(iii) When will the court order dissolution of the transferor company?
[C.A. (Final) May, 2000]