ORDER MERGER ORDER This is a petition under Sections 284 & 287 of the Companies Ordinance, 1984 seeking sanction of the Scheme for merger/amalgamation dated 01.9.2010 ("Scheme"). The Scheme envisages the transfer to and vesting in petitioner. No. 1 i.e. M/s. Ovex Technologies (Pvt.) Ltd. ("transferee company") of the undertakings of petitioner No. 2 i.e., M/s. Information Management (Pvt.) Ltd. "
(transfer 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 Companies in their meetings held on 25.08.2010 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 records 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 filling and record keeping.
(v) Amalgamation of the Companies would result in an improvement in the administration of personnel affairs of the staff and administrative polices 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 transferee company held in transferor company.
(ii) Shares of transferee company in transferee company shall transferor company shall stand cancelled upon the sanction of the merger.
(iii) The Ordinary shares 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 the petitioners to hold Extraordinary 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 Chairmen of their the said meetings.
5. According to the Report of the Chairmen dated 5.8.2011, the Extraordinary 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 share-holders of transferee company and. 100% share-holders of transferor company vetted 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 objection that the audited accounts for the year 2010 lave not been placed on the recorded alongwith Directors' Report and that the petitioners' have not obtained NOC from Silk Bank Limited. These objections were responded to by ie 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 assigned and filed with SECP alongwith the Directors' Report. Learned counsel for the petitioners has also referred to NOC issued by the Silk Bank dated 21.09.2011, 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) Faysal 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 on 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 recording to the procedural requirement detailed under the Companies Ordinance, 1984.
Sanction of Merger
10. The Scheme is not pre-judicial to the interest of the members or creditors of the Companies. I am satisfied with the merits of the Scheme, in its present from, which is placed on the record by the petitioners as Annexi.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 ordered:-
(i) That the undertaking 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 contained 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 10 days in terms of Section 284(3) of the Companies Ordinance, 1984.