Scheme of Amalgamation between M/s Wadala Commodities Limited and M/s Godrej Industries Limited (“Applicant Company”)
May 31, 2014
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Decided on: May 8, 2014Sections 391 & 394 of Companies Act, 1956 read with Section 110 of Companies Act, 2013 and SEBI Circular No. CIR/CFD/DIL/8/2013 dated May 21, 2013. Scheme of Amalgamation between M/s Wadala Commodities Limited and M/s Godrej Industries Limited (“Applicant Company”). Matter: For withdrawing the application for dispensing with an actual meeting and having one only by postal ballot and electronic voting. Brief facts: The applicant company has submitted before the court that the recent extensive amendments to the Companies Act, 1956 (“the 1956 Act”) and bringing into force of various sections of the Companies Act, 2013 (“the 2013 Act”), a question has been raised, whether in view of the provisions of Section 110 of the Companies Act, 2013 and SEBI Circular No. CIR/CFD/DIL/8/2013 dated May 21, 2013, a resolution for approval of a Scheme of Amalgamation can be passed by a majority of the equity shareholders casting their votes by postal ballot, which includes voting by electronic means, in complete substitution of an actual meeting. In other words, whether the 2013 Act, read with various circulars and notifications, has the effect of altogether eliminating the need for an actual meeting being convened. Decision: Pending till a final determination on the below issues Reason: (a) All provisions for compulsory voting by postal ballot and by electronic voting to the exclusion of an actual meeting cannot and do not apply to court-convened meetings. At such meetings, provision must be made for postal ballots and electronic voting, in addition to an actual meeting. Electronic voting must also be made available at the venue of the meeting. Any shareholder who has cast his vote by postal ballot or by electronic voting from a remote location (other than the venue of the meeting) shall not be entitled to vote at the meeting. He or she may, however, attend the meeting and participate in those proceedings. (b) The effect, interpretation and implication of the provisions of the Act 2013 and the relevant SEBI circulars and notifications, to the extent that they mandate a compulsory or even optional conduct of certain items of business by postal ballot (which includes electronic voting) to the exclusion of an actual meeting are matters that require a fuller consideration. The Central Government, through the Additional Solicitor- General, and SEBI will both need to be heard. The Company Registrar shall send an authenticated copy of this order to both the learned Additional Solicitor General and to SEBI requesting them to appear before the Court when this matter is next taken up for a consideration of this issue. On a prima-facie view that the elimination of all shareholder participation at an actual meeting is anathema to some of the most vital of shareholders’ rights, it is strongly recommended that till this issue is fully heard and decided, no authority or any company should insist upon such a postal-ballot-only meeting to the exclusion of an actual meeting. Since this is evidently a matter of some importance, the Company Registrar is directed to make a submission and obtain necessary directions on the administrative side to have the matter placed before an appropriate Bench. At such a hearing, further safeguards can also be evolved. For instance, it is entirely possible to have a Company Scheme Petition, one that follows an order on and compliance with a Company Summons for Direction, uploaded to the case status system of this Court. All such Company Scheme Petitions must have appended to them the report of the Chairman of the court-convened meeting and the scrutineers’ report. Making the petition available in its full form on a free and publicly accessible website such as the High Court, in addition to reports now being uploaded to the websites of the company and the stock exchanges would go a long way to ensuring the necessary information spread. The Ministry of Corporate Affairs must also immediately examine whether the uploads of these documents along with other statutory corporate filings/uploads can be made compulsory.