The NCLT, Kolkata Bench allowed application preferred for orders and directions with regard to meetings of shareholders and creditors in connection with the Scheme of Arrangement between ITC Limited (Demerged Company) and ITC Hotels Limited (Resulting Company). 

Brief Facts:

The present application has been filed for orders and directions with regard to meetings of shareholders and creditors in connection with the Scheme of Arrangement between ITC Limited (Demerged Company/ “Applicant No. 1”)  and ITC Hotels Limited (“Resulting Company”/ “Applicant No. 2” )and their respective shareholders, whereby and whereunder the Hotels Business (Demerged Undertaking) of the Demerged Company is proposed to be transferred to and vested in the Resulting Company from the Appointed Date on the terms and conditions fully stated in the said Scheme of Arrangement ( Scheme).

Contentions of the Applications: 

It was submitted that the Appointed Date is the same date as the Effective Date or such other date as may be mutually agreed by the Companies. The registered offices of the Applicants are situated within the jurisdiction of this Adjudicating Authority.

It was further submitted that the Demerged Company is a listed Company while the Resulting Company is an unlisted Company. The Ordinary Shares of the Demerged Company are listed on BSE, NSE and The Calcutta Stock Exchange Limited (CSE). The Global Depository Receipts of the Demerged Company are listed on the Luxembourg Stock Exchange.

The Resulting Company is a wholly owned subsidiary of the Demerged Company and has only 7 shareholders. All the shareholders of the Resulting Company have agreed in writing to the said Scheme of Arrangement by way of affidavits.

It was submitted that no change in value or terms or any compromise or arrangement is proposed under the Scheme with any of the Unsecured Creditors of the Demerged Company and the Resulting Company under Section 230(1)(a) read with Section 232(1) of the Companies Act.

Observations of the Tribunal: 

It was noted that for the relief of dispensation of meeting, it is important that the Tribunal as an institution should tread on the same path and tend not to become a sole crusader or be ploughing a lone furrow.

Relying on judicial precedents, the following was ruled: 

a. Meetings dispensed:

i. Meeting of the Equity Shareholders of the Resulting Company to consider the Scheme is dispensed with under Section 230(1) read with Section 232(1) of the Act in view of the consents provided in writing in 100% to the proposed Scheme of Arrangement by all the Equity Shareholders of the Resulting Company by way of affidavits.

(ii) Meetings of the respective Unsecured Creditors of the Demerged Company and the Resulting Company

It was noted that the net worth of both companies are highly positive, thus, the proposed scheme of arrangement by way of demerger does not affect the rights of all the stakeholders of the Applicant Companies and there is no dilution in the Shareholding in the Applicant Companies. Hence, there is no requirement of convening meetings of the Unsecured Creditor of the Applicant Companies as there no compromise or arrangement with them in terms of the Scheme is required and subsequently, and their rights are not affected under Section 230(1)(a) read with Section 232(1) of the Act.

b. Mode of meeting: 

The meeting of the Ordinary Shareholders of the Demerged Company, as above, shall be convened and held through VC / OAVM in accordance with the Act and the framework for holding meetings as prescribed in the Virtual Meeting Circulars.

c. Quorum and Attendance: 

The quorum for the said meeting of Ordinary Shareholders of the Demerged Company shall be 30 Ordinary Shareholders present at the meeting in accordance with the Act and the Virtual Meeting Circulars. Attendance at such meeting shall be recorded through electronic mode.

d. Authorizations:

Since the meeting is being held in Virtual Mode, physical attendance of Ordinary Shareholders is dispensed with and facility for attending or voting by proxy will not be available.

e. Value:

The value of each Ordinary Shareholder of the Demerged Company shall be in accordance with the Register of Members of the Demerged Company and, where entries in the said Register are disputed, the Chairperson of the meeting shall determine the value for purposes of the said meeting.

The decision of the Tribunal: 

Accordingly, the application was allowed. 

Case Title: ITC Limited and ITC Hotels Limted

Case No.: Company Application (CAA) No. 56/KB/2024

Coram: SMT. Bidisha Banerjee (Judicial Member), SHRI D. Arvind Member (Technical Mmeber ) 

Advocates for Applicants:  Advs. Mr. S.N. Mookherjee, Mr. D. N. Sharma,  Mr. Aniket Agarwal, Mr. Yash Singhi

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