Sterling Addlife India Ltd.,
Scheme of arrangement in the nature of demerger and transfer - No net reduction of the equity share capital of the resulting company
The petitioner-companies had applied for sanction to a composite scheme of arrangement in nature of demerger and transfer of treasury segment of the demerged company to the resulting company and reduction of capital of demerged company. The Regional Director objected with regard to reduction of share capital of the resulting company. The high court, noting that the number of shares of the resulting company being cancelled, as the same were transferred as a part of the demerged undertaking to the resulting company, and the number of the new shares being issued by the resulting company to the equity shareholders of the demerged company towards the consideration of the undertaking were the same, held that there was no net reduction of the equity share capital of the resulting company. Hence, there was no need of separate compliance with s.100 of the Companies Act. The objection of the Regional Director was overruled. Considering the dispensation of the separate procedure granted and considering the accepted principle of single window clearance the proposal was sanctioned as a consequential and integral part of the scheme. The scheme of arrangement was in the interest of the companies and their members and creditors.