MERGER ORDER This is a petition under Sections 284 & 287 of the Companies Ordinance, 1984 seeking sanction of the Scheme for merger/amalgamation dated 1.9.2010 ("Scheme"). The Scheme envisages the transfer to and vesting in Petitioner No, 1 i,e, M/s. Ovex Technologies (Pvt.) Ltd. (Vansferee company") of the undertakings of Petitioner No, 2 i,e, M/s. Information Management (Pvt.) Ltd.
(transferor company) together with all properties, assets, rights, bank accounts, liability and obligations of the transferor company.
Advantages of the Merger.
2. The Board of Directors of the above Compathes in their meetings held on 25.8.2010 approved the Scheme. The advantages behind the merger as listed in the Scheme, are as under:--
(i) Only a single Board of Directors shall be required to manage the affairs of the company.
(ii) Only one AGM will be required to be held and one set of annual accounts required to be published and circulated by the Company.
(iii)Only one register of shareholders and one set of books and record will be required to be maintained and one set of forms will be filed with the various Government Agencies including the Registrar of Companies.
(iv)Single assessm ent for income tax and sales tax and their filing and record keeping.
(v) Amalgamation of the Companies would result in an improvement in the administration of personal affairs of the staff and administrative policies will be uniform.
3. Salient Features of the Merger.
(i) Under the Scheme 200 fully paid up ordinary shares of transferee company shall be issued and allotted to members who are registered holders of ordinary shares of transferred company excluding 3,544, 996 shares of transferee company held in transferor company.
(ii) Shares of transferor company in transferee company shall stand cancelled upon the sanction of the merger.
(iii)The ordinary share of transferor company upon issuance and allotment pursuant to this Scheme shall rank pari passu with the existing ordinary shares of transferor company in all respects and shall be entitled to all dividends, bonuses and right issues.
(iv)After.the merger the Authorized Share Capital of transferee company will stand enhanced from Rs, 60 million to Rs, 61 million divided into 6.1 million ordinary shares.
Approval of the Scheme in EGMs.
4. Direction was issued to petitioners to hold Extra Ordinary General Meetings for the approval of the Scheme by the members under Section 284(1) of the Ordinance read with Rule 55 of the Companies (Court) Rules, 1997.. Two learned Advocates of this Court were appointed as Chairman to chair the said meetings.
5. According to the Report of the Chairman dated 5.8.2011, the Extra Ordinary General Meetings of the Petitioners were held on 29.7.2011 and the Scheme was approved in the said Meetings. The Report states that 98.17% of shareholders of transferee company and 100% shareholders of transferor company voted in favour of the Scheme.
Objections to the Merger
6. Learned counsel for the Competition Commission of Pakistan submits that the said Commission has no objection to the sanction of the proposed merger.
7. Joint Director of SECP, on the other hand, raised objections that the audited accounts for the years 2010 have not been placed on the record alongwith Directors' Report and -that the Petitioners' have not obtained NOC from Silk Bank Limited. These objections were responded to by the learned counsel for the petitioners by referring to the documents on the record, which clearly show that the audited accounts of the year 2010 have been duly signed and filed with the SECP alongwith the Director's Report. Learned counsel for the petitioners has also referred to NOC issued by the Silk Bank dated 21.9.2011, which is on the record. Therefore, the objections raised by the SECP are not sustainable.
8. Inspite of notice through proclamation in the newspapers no one has tendered appearance or filed any objection on behalf of the creditors namely; (i) Silk Bank Limited, (ii) Fayal Bank Limited,
(iii) Citi Bank, (iv) Orix Leasing Pakistan Limited and (v) Allied Bank Limited.
9. On the question whether authorized capital can be enhanced through amalgamation of the Companies, learned counsel for the petitioners has placed reliance nn "Messrs Omer Iqbal Solvent (Pvt.) Ltd. and another. In the matter of C.O. No, 58 of 2009 decided on 6th September, 2010" (2010 CLD 1802). The above case settles that authorized capital can be enhanced through the order of sanction of merger without additionally recrossing to the procedural requirement detailed under the Compahies Ordinance, 1984. ##TE Sanction of Merger.
10. The Scheme is not prejudicial to the interest of the members or creditors of the Companies. I am satisfied with the merits of the Scheme, in its present form, which is placed on the record by the petitioners as Annex-C and has been duly stamped and signed by the Reader of this Court. The Scheme of merger is, therefore, sanctioned w,e,f, today.
11. Subject to above, it is further orders:-- (i)That the undertakings of the transferor company shall stand transferred to the transferee company as provided under the Scheme; (ii)Transferee .company shall allot shares according to the Scheme to the members of the transferor company; (iii)The legal proceedings pending by or against the transferor company shall be continued by or against the transferee company; (iv)The transferor company shall stand dissolved without winding up.
(v)The authorized capital of the transferee company shall stand enhanced in terms of the Scheme.
(vi)The shares of transferor company held by transferee company shall also stand cancelled in terms of the Scheme.
12. Petitioners are directed to submit certified copy of this Merger Order to the SECP within 40 days in terms of Section 284 (3) of the Companies Ordinance, 1984.