Comment on the following referring to the provisions of the Companies Act, 2013: Niraj, who is a practicing Company Secretary has given an opinion to the Board of directors of a company that in case of a merger of wholly

In the light of Section 232, when the 'Transferor and Transferee Company' involve a Parent Company and a Wholly Owned Subsidiary, the meeting of Equity Shareholders, Secured and Unsecured Creditors can be dispensed with if the rights of the Equity Shareholders of the 'Transferee Company' are not being affected. In the matter of Mohit Agro Commodities & Ors. NCLAT, dated June 28, 2021, the NCLAT has observed that Section 232(1) of the Companies Act, 2013 uses the word 'may' which introduces an element of discretion to the Tribunal to be exercised in the interest of justice in appropriate situations. Section 232 is a specific provision carved out by the legislature when both conditions maintained in clauses (a) and (b) of section 232(1) are met. In the instant case the amalgamation sought for is between a Wholly Owned Subsidiary and the Holding Company. The points which were considered in the above-mentioned judgment were: Whether such an arrangement alters the rights of the Stakeholders of the Company? Whether such an amalgamation has any bearing internally on Creditors/Members of both the Companies? Whether not holding the subject meeting would amount to violation of any of the provisions of the Companies Act, 2013? Whether the Tribunal can exercise their discretion when the 'Transferor Company' is a Wholly Owned Subsidiary of the Transferee Company and financial position of the 'Transferee Company' is positive and the merger is not affecting the rights of the Shareholders or the Creditors? Therefore, it was held that the rights and liabilities of Secured and Unsecured Creditors were not getting affected in any manner by way of the proposed scheme as no new shares are being issued by the 'Transferor Company and no compromise is offered to any Secured and Unsecured Creditors of the 'Transferee Company. Hence, when the 'Transferor and Transferee Company' involve a Parent Company and a Wholly Owned Subsidiary, the meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors can be dispensed with as the rights of the Equity Shareholders of the 'Transferee Company' are not being affected. Therefore, the opinion given by Mr. Niraj, Practicing Company Secretary to the board of the company is correct.