1. The present application is filed under Sections 230 and 232 and other relevant provisions of the Companies Act, 2013 ( the “Act”) and read with Companies (Compromise, Arrangements, and Amalgamations) Rules, 2016, seeking dispensation of the meetings of the Equity Shareholders, Preference Shareholders, Secure Creditors and Unsecured Creditors of the Applicant Company in respect of the proposed Scheme of Amalgamation (“Scheme”) of Institute of Nutrition and Fitness Science Private Limited (“Transferor Company”) with Squats Fitness Private Limited (“Transferee Company”) with effect from the Appointed Date, i.e. 01.04.2022, as mentioned in the Scheme.
2. The registered offices of the Transferee Company/ Applicant company is situated in the State of Madhya Pradesh and is under the jurisdiction of the Hon’ble National Company Law Tribunal, Indore Bench.
3. The registered office of the Transferor Company is situated in the state of Maharashtra and a similar application was filed before the Mumbai Bench, disposing off the Company Application No. (CAA 87 of MB-V/2023) dispensing the meetings of creditors and shareholders of the Transferor Company.
4. The submissions made for the Applicant Company are summarised as under:
i) The Board of Directors of Applicant Company vide resolution dated 04.10.2022, has approved the said Scheme. The proposed Scheme is annexed to the Company Application as Annexure-P/1
ii) The Applicant Company Squats Fitness Private Limited with CIN: U74110MP2015PTC033773 was originally incorporated on 19.10.2015 under the provisions of the Companies Act, 2013.
iii) The authorised, issued, subscribed and paid-up share capital of the Applicant Transferee Company as on August 31, 2022 is as under:
|
Authorised share capital: |
Amount in INR |
|
|
2,48,250 |
Equity Shares of RS 10 each |
2,48,250 |
|
3,000 |
Compulsorily Convertible Preference Shares of Rs 100 each |
300,000 |
|
17,500 |
Equity shares of Rs 1 each (differential voting rights) |
17,500 |
|
Total: |
28,00,000 |
|
|
Issued, Subscribed and paid-up share capital |
Amount in INR |
|
|
10,000 |
Equity Sahres of Rs 10 each |
1,00,000 |
|
2,334 |
Compulsorily Convertible preference shares of Rs 100 each |
2,33,400 |
|
Total: |
3,33,400 |
|
iv) The Applicant Transferee Company is engaged in the business of providing solutions for all health and fitness guidance and related needs through its mobile application.
v) The Applicant Transferee Company, as on the date of approval of the Scheme by its Board, holds 5200 equity shares constituting 52% of the equity share capital of the Transferor Company and therefore Transferor Company is a subsidiary of Applicant Transferee Company.
vi) The Rationale and Object of the Scheme of Arrangement in the Nature of Amalgamation are stated as under:
a) Synergies of operations will be achieved, resulting in optimization of the common facilities such as manpower, office space, etc
b) Ensuring a streamlined group structure by reducing the number of legal entities in the group structure which will significantly reduce multiplicity of legal and regulatory compliance requirements and costs and will enhance business oversight and eliminate duplicative communication and coordination efforts across multiple entities;
c) Realization of benefits of greater synergies and economies of scale for the business of the Transferee Company, yielding beneficial results and pooling and optimal utilization of financial resources as well as managerial, technical, distribution and marketing resources of each other in the interest of maximizing value of their shareholders and other stakeholders. It will further enable greater efficiency in cash generated by the combined businesses, which can be deployed more efficiently for better debt managements.
d) Enable better tax planning at a combined level and also assist in leveraging resources of the overall downstream, combined entity.
vii) The proposed Scheme for the merger of the Transferor Company with the Applicant Transferee Company provides that all the assets and liabilities of the Transferor Company, immediately before the amalgamation, shall become the property/liability of the Applicant Transferee Company by virtue of the amalgamation. The Scheme further provides for the cancellation of all the issued share capital of the transferor company and payment of cash consideration and issue of new shares to Eligible Members other than the transferee company (as defined in Clause 11.2 of the scheme) as per the valuation report. The Scheme further provides for dissolution of the transferor company without being wound up. The transferee company has annexed with application a copy of Scheme of Amalgamation as Annexure-C from page 48-83.
viii) The Share Exchange Ratio in consideration of the Amalgamation of the Transferor company into and with the Applicant Transferee Company is as follows:
a) Cash consideration to Mr. Aniketh Shetty
“Rs 29,700 for every 1 (one) fully paid up equal to Rs 10 each held in the Transferor Company.”
and the payment shall be made not later than 30 days from the effective date of the scheme.
b) Share exchange ratio to the other shareholders of the Transferor Company (other than the Transferee Company and Mr Aniketh Shetty)
“0.0731 fully paid up equity shares of Rs 10 each of the Transferee Company, for everyone fully paid up equity shares of Rs 10 each held in the Transferor Company.”
ix) The report of valuation & share exchange ratio and certificate of the statutory auditors of the Applicant Transferee Company on accounting treatment proposed in the Scheme is placed on record. As per the auditor’s certificate, the accounting treatment proposed in the Scheme is in conformity with the accounting standards prescribed under section 133.
x) Provisions of the Competition Act, 2002 are not applicable in the present case. Hence no notice to the Competition Commission is required.
5. With Respect to the Transferee Company it is stated that:
i) There are (15) fifteen Equity Shareholders and a certificate from a Chartered Accountant certifying the list of shareholders is annexed with the application. A copy of the consent affidavit from all the equity shareholders is placed on record. Hence, the Transferee Company is seeking dispensation for holding the meeting of equity shareholders.
ii) There are (4) four Preference Shareholders in the Transferee company namely, Sporta Technologies Private Limited, Surge Ventures II, Elysian Park Ventures LLC, and Singularity Ventures Private Limited. A certificate from Chartered Accountant certifying the list of Preference Shareholders is annexed with the application. A copy of the consent affidavit from all the Preference Shareholders is placed on record. Hence, the Transferee Company is seeking dispensation for holding the meeting of Preference Shareholders.
iii) There are (2) two secured creditors and a certificate from a Chartered Accountant certifying the list of secured creditors is annexed with the application. A copy of the consent affidavit from the secured creditors is placed on record. Hence, the Transferee Company is seeking dispensation for holding the meeting of secured creditors.
iv) There were (720) Seven Hundred Twenty unsecured creditors in the Transferee Company as of 30.11.2022, during the pendency of the application the Transferee Company re-paid a large number of its creditors. In a supplementary affidavit filed before this Hon’ble Adjudicating Authority, the Transferee Company has annexed a list of creditors which is only (119) one hundred nineteen as of 28.05.2023. Hence, the Transferee Company is seeking dispensation for holding the meeting of unsecured creditors.
6. Taking into consideration the submissions and the documents filed, we issue the following directions:
(i) The meetings of the Equity Shareholder of the Applicant Transferee Company are hereby dispensed with in view of the consent affidavits attached with the application.
(ii) The meetings of the Preference Shareholder of the Applicant Transferee Company are hereby dispensed with in view of the consent affidavits attached with the application.
(iii) The meetings of the Secured Creditors of the Applicant Transferee Company are hereby dispensed with in view of the consent affidavits attached with the application.
(iv) The meetings of the Unsecured Creditors of the Applicant Transferee Company are hereby dispensed with in view of copy of the certificate dated 05.01.2023 by Kaushal Purswani and Associates, Chartered Accountants at Annexure-W has certified the Transferee Company and has positive net worth post the scheme being effective. There is no deduction in the share capital of the Transferee Company as a consequence of the scheme and that pursuance to the issue of a new shareholder of the Transferor Company, the share capital of the Transferee Company shall stand increased.
(a) In view of the judicial precedents laid down by Hon’ble National Company Law Appellate Tribunal in Lasa Supergenerics Limited v Harishree Aromatics & Chemicals Private Limited (Paras 9 and 10) relying upon Mohit Agro Commodities Processing Pvt. Ltd in Company Appeal (AT) No. 59 of 2021 (Paras 19, 20 and 21) and Gujarat Enviro Protection and Infrastructure Private Limited delivered by the National Company Law Tribunal, Mumbai (Para 25 to 27), wherein it has been held that there is no requirement to hold the meeting of the unsecured creditors of the Transferee Company/Applicant Company to seek their approval to the Scheme.
(b) In view of the aforesaid, meeting of the unsecured creditors of the Transferee Company/Applicant Company is hereby dispensed with.
7. In compliance with Section 230(5) of the Act and Rule 8 of the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016, the Applicant Company shall serve the notice on the following Authorities namely, (i) to the Central Government through the Regional Director, North Western Region, Ministry of Corporate Affairs; (ii) to the Registrar of Companies, Gwalior, and (iii) to the Income Tax Department along with full details of assessing officer and PAN number of the Applicant Company with the copy also to the Chief Commissioner of Income Tax Office, and to such other Authorities who may govern the working of the Applicant Company involved in the Scheme, so that timely and proper reply may be filed. Representations, if any, to be made by them shall be sent to the Adjudicating Authority within a period of 30 days from the date of receipt of such notice, and a copy of such representation shall simultaneously be sent to the concerned company, failing which, it shall be presumed that they have no objection to the proposed Scheme.
8. The Applicant Company shall file a compliance affidavit with the Registry with regard to the directions of the Adjudicating Authority complied with as per Rule 12 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
9. The Application CA(CAA) 1 OF 2023 is allowed and stands disposed of.
