XYZ Ltd. and ABC Ltd. filed applications before National Company Law Tribunal (NCLT) for amalgamation of both the companies to form a new Company PQR Ltd. Regional Director by an affidavit pointed out the following incon
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2018
XYZ Ltd. and ABC Ltd. filed applications before National Company Law Tribunal (NCLT) for amalgamation of both the companies to form a new Company PQR Ltd. Regional Director by an affidavit pointed out the following inconsistencies in the application(s): (i) Main objects of XYZ Ltd. are not similar to that of ABC Ltd; and (ii) Authorized capital of PQR Ltd. is not sufficient to cover the total consideration. As a Company Secretary, you are requested to brief the facts and background, along with the judicial precedents, to the counsel enabling him to proceed in the matter.
Answer & Explanation:
The Counsel in the matter can be briefed with the following judicial precedents to the objections or observations made by the Regional Director before the National Company Law Tribunal: It was held in the matter of Re. Rangkala Investments Ltd. (1996) 1 Comp LJ 298 (Guj) that Court will sanction the scheme if alteration of the memorandum is by reshuffling of the Objects Clause by shifting Other Objects to Main Objects as per procedure prescribed under the Act; Bombay and Calcutta High courts have even held that there need not be unison or identity between objects of transferor and transferee companies. Companies carrying entirely dissimilar businesses can amalgamate. May refer to Re: PMP Auto India Ltd. (1994) 80 Comp Cas 291 (Bom); Re: Mcleod Russel (India) Ltd. (1997) 13 SCL 126 (Cal). On approval of the scheme, transferee company can increase its authorized capital as was held in Mahavir Weaves Pvt. Ltd. (1985) 83 Comp Cas 180.
Topics: Corporate Restructuring
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