The Tax Publishers 2018 TaxPub(CL) 0538 (NCLAT-Del) : (2018) 208 CompCas 0321

 

Ritemed Pharma Retail (P) Ltd. & Anr. v. Official Liquidator & Anr.

 

COMPANIES ACT, 2013,

--Merger and amalgamation of companies--Appeal against non-sanction of scheme of amalgamation due to issuance of shares at premiumNo bar on issuance of shares at premium--Scheme followed by procedure and complied with all requirements --Where Tribunal rejected sanction of scheme of amalgamation on the ground that there were not specific provisions providing for issuance of shares at premium in case of any scheme of amalgamation, but there was no bar to issue of shares at a premium whether for cash or otherwise, fair value of assets of transferor, which was acquired by transferee was more than face value of shares issued for the same, therefore, the transferee had no other alternative, but to allot the shares at a premium, both the transferor and transferee company had followed the procedure for the purpose of the scheme and had complied with all requirements, therefore, the Tribunal was directed to sanction the scheme.--Transferor and transferee company filed a joint petition for sanction of scheme of amalgamation between them and their respective shareholders. The scheme of amalgamation provided that the transferee company should, without any further act or deed, issue and allot equity shares at premium to member of the transferor. Tribunal rejected the sanction of the scheme on the ground that the transferor and transferee company were private limited companies and the scheme was not in compliance with section 232. Transferor and transferee company filed an appeal against the order on the ground that there was no legal embargo or prohibition for issue of shares at a premium for discharge of purchase consideration in pursuance of the scheme of amalgamation either by a private company or a public company under provisions of Companies Act, 2013. Held: Section 232(3)(j) is applicable to all companies and does not make a distinction whether the company is a private or public company or whether it is a listed company or non-listed company. Further that, there was no bar to issue of shares at a premium whether for cash or otherwise. It was the prerogative of the transferee to issue shares at a premium or otherwise depending upon the facts and circumstances of the situation. Transferee issued the shares at premium to the transferor's shareholder for acquiring assets of the transferor, as fair value of the assets acquired by the transferee was more than face value of the shares issued for the same. Therefore, the transferee had no other alternative, but to allot the shares at a premium and difference being carried to a “securities premium account”. Both the transferor and transferee company had followed the procedure for the purpose of the scheme and had complied with all requirements. Therefore, the Tribunal did not have any jurisdiction to reject the sanction of scheme merely upon unfounded belief that there were not specific provisions providing for issuance of shares at premium in case of any scheme of amalgamation. Hence, the Tribunal was directed to sanction the scheme.

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