ii Approval of Members and creditors approval to the

Ii approval of members and creditors approval to the

This preview shows page 110 - 112 out of 295 pages.

(ii) Approval of Shareholders/Creditors Members' and creditors' approval to the scheme of amalgamation is sine qua non for Court's sanction. Without that the Court cannot proceed. This approval is to be obtained at specially convened meetings held as per court's directions [Section 391(1)]. However, the court may dispense with meetings of members/creditors. Normally, creditors' meetings are dispensed with subject to certain conditions. For instance, members' meeting may be dispensed with if all members' individual consent is obtained. (iii) Approval of Financial Institutions The approval of the Financial Institutions, trustees to the debenture holders and banks, investment corporations would be required if the Company has borrowed funds either as term loans, working capital requirements and/or have issued debentures to the public and have appointed any one of them as trustees to the debenture holders. (iv) Approval from the Land Holders If the land on which the factory is situated is the lease-hold land and the terms of the lease deed so specifies, the approval from the lessor will be needed. (v) Approval of the High Court Both the companies (amalgamating as well as amalgamated) are required to seek approval from the respective High Courts in accordance with the provisions of Sections 391-394 of the Act, In this regard, the following points are worth noting: An application under Sections 391 and 394 to High Court for an order convening a meeting of members and/or creditors, is the first step to seeking Court's sanction to amalgamation. Every amalgamation, except those which involve sick industrial companies, requires sanction of High Court ' which has jurisdiction over the State/area where the registered office of a company is situated. [Section 391]. If transferor and transferee companies are under the jurisdiction of different High Courts, separate approvals are necessary. If both are under jurisdiction of one High Court, joint application may be made.
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(Mohan Exports Ltd. v. Tarun Overseas P. Ltd. (1994) 14 CLA 279 (Del) dissenting from Re Electro Carbonium P. Ltd.. (1979) 49 Comp Cas 825 (Kar) wherein it was held that a joint application cannot be made.] -Determination of Cut off Date Amonst others, the foremost requirement is the determination of cut off date from which all properties, movable as well as immovable and rights attached thereto etc. are required to be transferred from amalgamating company to the amalgamated company. The date may be called transfer date or appointed date and generally it is the first day of preceding financial year for which the audited accounts are available with the company. Another requirement is the determination of a date on which all the required approvals under various statutes are obtained on which the transfer and vesting of the undertaking of amalgamating company with the amalgamated company would take effect. It is common to fix an appointed date as effective date in respect of scheme of amalgamation.
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