Increase in Authorized Share Capital on sanction of scheme of amalgamation does not require compliance under Section 94 & 97 of Companies Act, 1956


Decided on 11/03/2011

The petitioners, M/s. Thantiyadi Realtors Private Limited, transferor company and M/s. Somasimara Realtors Private Limited, Transferee Company had approached the court to sanction the scheme of amalgamation so as to make it binding on all the Equity Shareholders and Creditors of the transferee Company, and to dissolve the transferor company without the process of winding up.

The Regional Director (Respondent), in his report raised an objection that as provided in the petition, upon the scheme being sanctioned by the court, the authorized capital of the transferor company shall stand transferred to and added to the authorized capital of the transferee company. So, the transferee company is required to file Form No. 5 with the registration fees by complying with the provisions of Section 94 & 97 of the Act.

The Hon’ble Court approved the scheme of Amalgamation due to the following reasons:

The objection raised by the regional director cannot come in the way of the amalgamation in view of the judgement given by the above mentioned court in a similar case of Regional Director and another vs. Cavin Plastics and Chemicals P.Ltd, reported in (2008) wherein it was provided as follows:

  1. The issue is not whether the fees already paid by the transferor company would be automatically transferred to the transferee company.
  2. The intention behind Section 391 of the Companies Act, 1956 is to enable the Company to reconstitute itself without being required to make a number of applications to meet the provisions of the Companies Act, and to make the necessary alterations required by the memorandum and the articles of association for functioning as a reconstituted company under the scheme.
  3. Section 391 is a complete code in itself, and is intended to be in the nature of a  “single window clearance”. Therefore, no separate fees need be paid to the Registrar.
  4. Moreover, there is no objection to the sanctioning of the scheme from the creditors or shareholders.

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