Where directors are sought to be proceeded against criminally for their act as director by the creditor pending the consideration of a scheme of arrangement, the criminal proceeding can be stayed for the limited purpose so that the directors are not pressurized by the creditors and the scheme can be considered effectively.WHEN COURT CAN PROCEED TO GIVE EFFECT TO SCHEME The court held that the amalgamation scheme has been approved by the majority of the shareholders of both the companies, the exchange ratio has been fixed by a reputed firm of Chartered Accountants and accepted by the share holders, the statutory formalities have been complied with, the scheme is fair and reasonable and there is no fraud involved, then the court would proceed to give effect to the decision of the majority of the share holders of the company. The Mo A of the company contains power to amalgamate. The affidavit is signed and sworn in prescribed manner by the deponent under Code of Civil Procedure, 1908. Send a copy of application made to the court to the concerned Regional Director, Department of Company Affairs (section 394A). The High Court should give the directions in respect of the matter set out in Rule 69 of Companies Court Rules, with respect to meeting including fixation of time, place and quorum of such meeting, appointment of chairman, etc. Notice of general meeting should be sent to members setting forth the terms of compromise or arrangement and their effect, interest of directors, managing director or manager of the company and effect of those interested on the amalgamation. 36 of Companies Court Rule] shall be sent to the members at least 21 clear days before meeting [ Rule 74 of Companies Court Rules ]. Where notice is sent by an advertisement , he same should be in the form no.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. Interpretation of Section Meaning of Company The expression ‘company’ includes an unregistered company.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.
CHAIRMAN’S REPORT After approval of scheme by creditors or members, the Chairman is required to file his report within seven days of conclusion of meeting.The petition is accompanied by an affidavit in Form no. The High Court should be moved jointly by transferor and transferee companies where registered offices of both the companies are in the same state. A suit by Bank against surety can be stayed till the time the amount recoverable and due from the company is determined. : POWER OF HIGH COURT TO ENFORCR COMPROMISE AND ARRANGMENTS. It was held that the court can make the eviction orders against a person who have prima facie no right, title or interest in the company’s properties by issuing suitable directions. But where the modification makes the compromise or arrangement suitably in variance of original one or where it prejudicially affects any section of the creditors or contributories, the sanction of a fresh meeting will have to be sought.Where both companies have their registered office in different states, each company shall move to the respective High Court for directions. The certified copy of the order of the High Court shall be filed in form no. as approved by High Court is implemented a s per direction of the High Court by issue of suitable notice to the shareholders. Convene a Board meeting and pass Board resolution for allotment of shares to the shareholders of the transferor company in exchange of shares held in the transferor company and fixing of record date for the purpose. Provisions of this section confer wide powers and authorities in the Courts to enforce and make effective a compromise or an arrangement. The provisions of section 6 of Specific Relief Act 1963 cannot override the provisions of section 391and 392 of the Act. : INFORMATION AS TO COMPROMISES OR ARRANGMENTS WITH CREDITORS AND MAMBERS.The court having jurisdiction is the court at the place where the unregistered company reside and has its principal place of business.A Foreign company which is an unregistered company is a ‘company’ under this section .Whereas Merger means the combining of two or more entities into one, through a purchase acquisition or a pooling of interests.