ABID HUSSAIN CHATTHA, J. This is a Petition for reconstruction and rearrangement under sections 279 to 282 of the Companies Act, 2017 (the " Act") seeking sanction of the Scheme of Arrangement amongst Masood Fabrics Limited ("MFL"), Roomi Fabrics Limited ("RFL"), Mahmood Textile Mills Limited ("MTML"), Masood Spinning Mills Limited ("MSML"), MG Agri Foods (Pvt.) Limited ("MGAF'), Roomi Poultry (Pvt.) Limited ("RPPL"), Passion Foods (Pvt.) Linited ("PFPL") and Mahmood Cotton Ginning Pressing and Oil Mils (Pvt.) Limited ("MCGPO") (collectively referred to as the "Petitioner Companies" and/or "Mahmood Group", wherever the context so requires), Khawaja Muhammad Iqbal, Khawaja Muhammad Ilyas and Khawaja Muhammad, Younus (together with the Petitioner Companies referred to as the "Petitioners").
2. The Scheme of Arrangement has been approved by the Board of Directors of the Petitioner Companies and shareholders of the Petitioner Companies in Extraordinary General Meetings held on 31.05.2022. The principal objective of the Scheme of Arrangement entered into between the Petitioners is rearrangement and reconstruction of Mahmood Group into Group A and Group B by transferring:- a) Shares of MFL held by MCGPO to RFL; b) Shares of MTML held by RFL to MCGPO, Khawaja Muhammad lqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ryas; c) Shares of RFL held by MTML to MFL; d) Shares of MSML held by MFL to MTML, Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas; e) Shares of MFL held by Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas to RFL; f) Shares of MGAF held by RFL to Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas; g) Shares of PFPL held by RFL to Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas; h) Shares of RPPL held by RFL to Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas; i) Shares of RFL held by Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas to MFL; j) Shares of MGAF held by MFL to Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas; k) Shares of PFPL held by MFL to Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas; and l) Shares of RPPL held by MFL to Khawaja Muhammad Iqbal, Khawaja Muhammad Younus and Khawaja Muhammad Ilyas.
3. The benefits of the Scheme of Arrangement shall include but are not limited to the following: a) By restructuring Mahmood Group into Group A (MFL and RFL) and Group B (MTML, MSML, MGAF, RPPL, PFPL and MCGPO), shareholding of all the Petitioner Companies will be streamlined allowing the respective investors and stakeholders to focus on the existing business including expansion and .modernization leading to optimum returns for the shareholders; b) By streamlining the capital structure of Mahmood Group, shareholders will have more control over their respective Petitioner Companies, allowing them to steer the 'growth of business and reduce costs; and c) By restricting Mahmood Group, the Boards of Directors of the respective Petitioner Companies will be streamlined allowing further strengthening of relationships amongst the Boards and key employees.
4. In pursuance to Article 4 of the Scheme of Arrangement, the consideration/swap ratio for the Scheme of Arrangement are: MCGPO shareholding in MFLShare Swap Ratio between MFL and MTMLShares of MTML to be exchanged A B A * B 300,000 0.8832 264,970 MTML shareholding in RFLShares Swap Ratio between RFL and MSMLShares Swap Ratio between RFL and A B A * B 4,0001,000 1.2304 4,921,692 Name of ShareholderPart 2 of RFL Shareholding in MTMLShare Swap Ratio between MTML and MFLShares of MFL to be exchanged A B A * B KM Iqbal 112,228 1.1322 127,064 KM Ilyas 112,227 1.1322 127,064 KM Younus 112,227 1.1322 127,064 336,682 381,193 (C) RFL Shareholding in MGAFShare Swap Ratio between MGAF and MFL KM Iqbal 333,333 0.0456 15,185 KM Ilyas 333,333 0.0456 15,185 KM Younus 333,334 0.0456 15,185 1,000,000 45,554 (D) RFL Shareholding in RPPLShare Swap Ratio between RPPL and MFL KM Iqbal 1,666,666 0.0383 63,783 KM Ilyas 1,666,667 0.0383 63,783 KM Youus 1,666,667 0.038.3 63,783 5,000,000 191,349 (E) RFL Shareholding in PFPLShare Swap Ratio between PFPL and MFL KM Iqbal 1,333,333 0.0149 19,828 KM Ilyas 1,333,334 0.0149 19,828 KM Younus 1,333,333 0.0149 19,828 4,000,000 59,485 (F)
Total Shares of MFL to be exchanged (C+D+E+F) 677,580 Name of ShareholderPart 2 of MFL.
Shareholding in MSMLShares Swap Ratio between MSML and RFLShares of RFL to be exchanged A B A * B KM Iqbal 1,692,769 0.8127 1,375,762 KM Ilyas 1,692,770 0.8127 1,375,762 KM Younus 1,692,769 0.8127 1,375,762 5,078,308 4,127,286 (C) MFL Shareholding in MGAF (divided into 3 equal parts)Share Swap Ratio between MGAF and RFL KM Iqbal 3'33,333 0.1169 38,959 KM Ilyas 333,333 0.1169 38,959 KM Younus 333,334 0.1169 38,959 1,000,000 116,878 (D) MFL Share Swap Ratio between Shareholding in RPPLRPM., and RFL KM Iqbal 1,666,667 0.0982 163,652 KM' Ilyas 1,666,666 0.0982 163,652 KM Younus 1,666,667 0.0982 163,652 5,000;000 490,956 (E) MFL Shareholding in PFPL (divided into 3 equal parts)Share Swap Ratio between PFPL and RFL KM Iqbal 1;333,333 0.0382 50,875 KM Ilyas 1,333,333 0.0382 50,875 KM Younus 1,333,334 0.0382 50.875 4,000,000 152,625 (F)
Total Shares of RFL to be exchanged (C+D+E+F) 4,887,747
5. This Court vide Order dated 15.04.2022 appointed Malik Kashif Rafiq Rajwana and mian Babur Saleem, Advocates as joint Chairmen to call and hold Extraordinary General Meetings of the shareholders/ members of the Petitioner Companies under section 279 of the Act read with Rules 55 and 61 of the Companies (Court) Rules, 1997. Notices were issued to the Securities and Exchange Commission of Pakistan (the "SECP") and Competition Commission of Pakistan (the "CCP"). The comprehensive report submitted by the Chairmen states that Extraordinary, General Meetings of the Petitioner Companies were held on 31.05.2022, wherein 100% of the shareholders were present who by voting unanimously consented to and approved the Scheme of Arrangement for the rearrangement and reconstruction of Mahmood Group. All formalities with respect to holding of such meetings were duly complied with.
6. The CCP vide its Order dated 07.06.2022 in Case No. 1279/Merger-CCP/22 has conveyed its authorization to the Scheme of Arrangement. The said Order and NOC's regarding sanction of the Scheme of Arrangement by the secured creditors of the Petitioner Companies have also been placed -on record through C.M. No. 1842 of 2022. SECP filed its parawise comments in this Petition regarding the Scheme of Arrangement. Although no objections have been raised therein, however, certain observations for consideration of this Court have been made which are considered as under:- a) With respect to issuance of notice to Pakistan Stock Exchange (the "PSX"), it is noted that there is no requirement of law to issue such notice. Even otherwise, Petitioner No. 3 duly intimated to PSX its EOGM related to approval of the Scheme of Arrangement and relevant documents in this regard have been placed on record through C. M. No. 1842 of 2022. b) With respect to use of terms "Effective Date" and "Appointed Date" it is noted that the said terms have been duly defined in the Scheme of Arrangement and used in appropriate context in Clause 3 thereof. c) With regard to Valuation Reports making basis of the swap ratio, the same are duly found mention in the Swap Ratio Certificate issued by a renowned chartered accountants firm, namely, Messrs Crowe Hussain Chaudhry & Co. The same have been duly considered by the said firm to arrive at the Swap Ratio, which has not been disputed by the party concerned.
7. In view of the above, it is abundantly clear that the Scheme of Arrangement is acceptable to the shareholders, creditors and regulators. As such, it is concluded that the Scheme of Arrangement is not prejudicial to the members of the Petitioner Companies. This Court, therefore, is satisfied with the merits of the Scheme of Arrangement which is placed on the record in the Report of the Chairmen duly signed by them. The Scheme of Arrangement is, therefore, sanctioned and will take effect in terms of its relevant clause. The Petitioners are directed to submit certified copy of this Judgment with the SECP within 30 days in terms of section 284 of the Act. The Scheme of Arrangement is duly sanctioned for the above reasons and shall be effective in terms of relevant clauses thereof.