1. This petition under sections 284 and 287 of the Companies Ordinance, 1984, hereinafter referred as the Ordinance, has been filed by petitioner No,1 Reckitt & Colman Pharmaceuticals (Private)
2. Limtted and petitioner No,2 Reckitt & Colman of Pakistan Limited, for amalgamation of the two companies. The purpose of this petition is to get sanction of the Court to a Scheme of Arrangement for Amalgamation between the petitioner No,1 and its Members and petitioner No, 2 and its Members.
3. 2.The petitioners have sought orders under section 287 of the Companies Ordinance, 1984 facilitating the amalgamation of petitioner No,1 with the petitioner No,2 in accordance with the Scheme of Arrangement, including, inter alia, orders providing for the transfer to and vesting in the petitioner No,2 of the whole undertaking of the petitioner No,1 together with all the property, assets, rights, liabilities and obligations of every description of the petitioner No,1 the allotment of fully paid-up ordinary shares of the petitioner No,2 to the registered holders of the ordinary shares of the petitioners No,1 in lieu of those shares held by them, the continuation by or against petitioner No,2 of all legal proceedings instituted by or against the petitioner No,1 that may be pending and the eventual dissolution without winding-up of the petitioner No,1, Each of the petitioners is an existing company within the meaning of section 2(1)(15) of the Ordinance, having been incorporated under the previous Companies Act, 1913, and is registered at Karachi in the Province of Sindh. Scheme of Arrangement consists of 21 clauses, which broadly speak for the amalgamation, showing the capital object of the Scheme issued shares by RCPPL and discharge by RCP liability and obligations, particularly clause 11 regarding employment and employees of the petitioners and regarding all deeds, rules and other instruments relating to the RCP(Pvt.) Ltd, Staff Provident Fund and the RCP(Pvt,) Ltd, Senior Management Staff Gratuity Fund established by RCPDL. Clause 13 shows all miscellaneous matters i,e, suits, appeals and other legal proceedings instituted by or against RCPPL and pending immediately before the effective date, which shall be treated as suits, appeals and legal proceedings by or against RCP and may be continued, .Prosecuted and enforced by or against RCP accordingly. According to clause 17 the RCPPL shall be dissolved, without winding up on the date on which the ordinary shares of RCP are allotted to the holders of the ordinary shares of RCPPL or on such later date.
4. The petitioners have obtained letters from he creditors of petitioner No,1 representing 95.35 per cent. In value of its creditors who were owned sums exceeding Rs,1,000 as at 18 August 1996 as shown in the Statement annexed with the plaint as Annexure I and from the creditors of petitioner No,2 representing 98.78 per cent. In value of its creditors who were owed sums exceeding Rs,1,000 as at 18th August, 1996 as shown in the Statement annexed with the petition as Annexure J.
5. That for the purpose of section 284 of the Companies Ordinance, meeting as required was held and permission was obtained from the Court vide CMA No,1468/96 dated 10-10-1996. In pursuance of the order of the Court meetings were held and affidavit of Shamsuddin son of late Muhammad Subhan, on behalf of petitioner No, 1, has been filed, which is Annexure 'A', alongwith letter from Corporate Law Authority, order passed by Abdul Rehman Qureshi, Member, Memorandum and Articles of Association of Reckitt & Colman Pharmaceuticals (Private) Limited, as Annexure-C, Affidavit of Tariq Ikram son of late Shaikh Ikram Ali, Chief Executive of petitioner No, 2 has been filed alongwith letter of Corporate Law Authority, Annexure-A alongwith order and Memorandum and Articles of Association of Reckitt & Colman of Pakistan, Limited, as Annexure-C.
6. Furthermore in pursuance of the order passed on CMA No, 1468/96 notices were published in Daily Dawn, Karachi dated 19-10-1996, Daily Jang dated 19-10-1996, Nawa-e-Waqt, Lahore dated 15-10- 1996, The Nation, Lahore dated 15-10-1996 and Daily Business Recorder, Karachi dated 19-10-1996 and notice was also published in the Gazette of Pakistan, Extraordinary dated 16th October, 1996, notice was also published in the Sindh Government Gazette dated 17th October, 1996.
7. In pursuance of the order of the Court the Registrar, Joint Companies has submitted as fellows:-- "Registrar of Companies has no representation to make under section 288 of the Companies Ordinance, 1984 against the proposed amalgamation of M/s. Reckitt Colman Pharmaceuticals (Pvt.) Ltd. With Reckitt & Colman of Pakistan Ltd. The Hon'ble Court may however kindly, take into account that all material, facts relating to the petitioner companies as mentioned in subsection (2) of section 284 of Ordinance have been disclosed and the Scheme of amalgamation is duly approved by the members of respective Companies with the statutory majority in a meeting called and held under the direction of Hon'ble Court in terms of section 284 (1) of the Companies Ordinance, 1984."
8. Report by Mr. K. J. Dinshaw, Chairman and a Director of petitioner No, 1 and Chairman and a Director of petitioner No, 2 has been submitted under Rule 955 of the Sindh Chief Court Rules (Original Side), on the results of the meetings of the Members of the petitioner No, 1 and of the petitioner No, 2 held under the order of the Court dated 10-10-1996, in CMA No, 1468 of 1996. The report shows that following steps were taken by the petitioners for convening meetings of their respective Members:-- "A. By Petitioner No, 1:
(i) At a meeting held on 14th October 1996 the Board of Directors of the petitioner No, 1 resolved to convene the meeting of the Members of the petitioner No, 1 at Hotel Avari Towers. Fatima Jinnah Road, Karachi on Thursday the 14th day of November 1996 at 11-30 a.m.
(ii) Notice of the meeting and the statement of information required to accompany the notice under section 286 of the Companies Ordinance, 1984, of which copies are annexed hereto and respectively marked "Exhibit RCPPL-1" and "Exhibit RCPPL-2" were sent by courier to all the Members of the petitioner No, 1 and to all other persons entitled to any share of the petitioner No, 1 in consequence of the death of a Member of which the petitioner No, 1 had notice, and notice of the meeting was sent to the Members of the petitioner in the manner provided in the Articles of Association of the petitioner No,
1. The notice relating to the closure of the Share Register of the petitioner No,1 for the period from 8th November, 1996 to 14th November, 1996 (both days inclusive) was published in each of the following newspapers, namely, "Dawn" published in English from Karachi on 19th October, 1996 and "Jang" published in Urdu from Karachi on 19th October, 1996, copies whereof are annexed hereto and marked "Exhibit RCPPL-3" and "Exhibit RCPPL-4" respectively.
(iii) The meeting of the Members of the petitioner No, 1 convened by the notice aforesaid was duly held and as directed by this honourable Court I presided at the meeting as the Chairman thereof.
9. B. By the Petitioner No, 2:
(i) At a meeting held on 14th October, 1996 the Board of Directors of the petitioner No,2 resolved to convene the meeting of the Members of the petitioner No,2 at Hotel Avari Towers, Fatima Jinnah Road, Karachi on Thursday the 14th day of November, 1996 at 3-00 p.m.
(ii) Notice of the meeting and the statement of information required to accompany the notice under section 286 of the Companies Ordinance, 1984, of which copies are annexed hereto and respectively marked "Exhibit RCP-1" and "Exhibit RCP-2", were sent by post under certificate of posting to all the Members of which the petitioner No,2 and to all other persons entitled to any share of the petitioner No,2 in consequence of the death of a Member of which the petitioner No,2 had notice, and notice of the meeting has also published in each of the following newspapers, namely, "Dawn" published in English from Karachi on 19th October, 1996, "Business Recorder" published in English from Karachi on 19th October, 1996, "Jang" published in Urdu from Karachi on 19th October, 1996. "the Nation" published in English from Lahore on 19th October, 1996 and "Nawai Waqt" published in Urdu from Lahore on 19th October, 1996 copies whereof are annexed hereto and marked "Exhibit RCP-3" "Exhibit RCP-4, "Exhibit RCP-5", "Exhibit RCP-6", "Exhibit RCP-7" respectively.
(iii) The meeting of the Member of the petitioner No,2 convened by the notice aforesaid was duly held and as directed by this Honourable Court I presided at the meeting as the Chairman thereof.
10. 3.At the meeting of the Members of the petitioner No, 1 held on 14th November, 1996 as aforesaid, the requisite quorum as directed by this honourable Court being present, the Scheme of Arrangement, of which a copy had been circulated alongwith statement of information under section 286 of the Companies Ordinance, 1984, was considered and the following resolution was passed by the majority required under section 284(2) of the Companies Ordinance, 1984.
11. RESOLVED that the Scheme of Arrangement for Amalgamation dated 11th August, 1996 as amended on 24th September, 1996 between Reckitt & Colman Pharmaceuticals (Private) Limited and its Members and Reckitt & Colman of Pakistan Limited and its Members, considered by this meeting and initialled by the Chairman of this meeting for purposes of identification, be and is hereby approved adopted and agreed.
12. A copy of the Scheme of Arrangement referred to in the above resolution and bearing my initials as Chairman of the meeting is annexed hereto and marked "Exhibit RCPPL-5". The voting on the above resolution was by a poll as directed by. This Honourable Court. The polling papers evidencing the votes cast have been placed in a sealed cover for retention by the Company Secretary of the petitioner No, 1 pending disposal of the main petition. The Members present in person and by proxy represented issued share capital of the values shown in the following table: Members presentNo, Representing In person 14 Rs,6,673,850 By proxy 13 Rs,66,709,140 Total: 27 Rs,73,382,990 The votes given for and against the resolution were as stated in the following table: Members VotingFor Against No, RepresentingNo, Representing In person 14 Rs,6,673.850Rs,--- By proxy 13 Rs,66,709,140Rs,--- Total 27 Rs,73,382,990Rs,--- The Members of the petitioner No,1 voting in favour of the resolution thus represented 100 per cent.
13. In value of the shares held by the Members present in person or by proxy and voting at the meeting.
14. 4.At the meeting of the Member of the petitioner No,2 held on 14th November, 1996 as aforesaid, the requisite quorum as directed by this honurable Court being present, the Scheme of Arrangement, of which a copy had been circulated alongwith the statement of information under section 286 of the Companies Ordinance 1984, was considered and the followings resolution was passed by the majority required under section 284 (2) of the Companies Ordinance, 1984.
15. RESOLVED that Scheme of Arrangement for Amalgamation dated 11th August, 1996 as amended on 24th September, 1996 between Reckitt & Colman Pharmaceuticals (Private) Limited and its Members and Reckitt & Colman of Pakistan Limited and its Members, considered by this meeting and initialled by the Chairman of this meeting for purposes of identification, be and is hereby approved, adopted and agreed.
16. A copy of the Scheme of Arrangement referred to in the above resolution and bearing my initials as Chairman of the meeting is annexed hereto and marked "Exhibit RCP-8". The voting on the above resolution was by a poll as directed by this Honourable Court. The polling papers evidencing the votes cast have been placed in a sealed cover for retention by the Company Secretary of the petitioner No,2 pending disposal of the main petition. The Members present in person and by proxy represented issued share capital of the values shown in the following table: Members presentNo, Representing In person 54 Rs,622,310 By proxy 31 Rs,147,867,110 Total: 85 Rs,148,489,420 The votes given for and against the resolution were as stated in the following table: Members VotingFor Against No, Representing No, Representing In person 43 Rs, 616,230 Rs,--- By proxy 31 Rs, 147,867,110 Rs,--- Total 74 Rs, 148,483,340 Rs,--- The Members of the petitioner No, 2 voting in favour of the resolution thus represented 100 per cent.
17. Is value of the shares held by the Members present in person or by proxy and voting at the meeting.
18. Karachi dated this 20th day of November 1996"
19. Employees of the petitioners have also not raised any objection because terms and conditions of the employment are not to be disturbed. There is single clause of shareholder with both the petitioner. The latest financial position of the petitioners has already been submitted in paras.7 and 8 of the petition, copy of audited accounts, of Reckitt & Colman (Private) Limited for the 52 weeks' period ended 30th December, 1995, audited by A.F. Ferguson Chartered Accountants, has been filed with the petition as Annexure 'F'.
20. I have gone through the material placed with the J.M. And I have also perused the Resolution and the Report of a Chairman, K.J. Dinshaw and affidavits of Mr. M. Shamsuddin and Rafiq Ikram, both Chief Executive and Director of petitioners Nos.1 and 2 and the Report of the Registrar, Joint Stock Companies, objections to the amalgamation having not been filed from any quarter, apparently there would be no material change if the amalgamation, as sought is, granted. The position regarding the amalgamation like this matter has very elaborately stated by Lindley L.J. In reAlabama.
21. New Orleans, Taxes and Pacific Junction Rahway Company (1891) 1 Chancery Division 213 at 238, 239 (CA) as follows:-- ....What the Court has to do is to see, first of all, that the provisions of that statute have been complied with and secondly, that the majority, has been acting bona fide. The Court has also to see that the minority is not being overridden by a majority having interests of its own clashing with those of the minority whom they seek to coerce. Further than that, the Court has to look at the scheme and see whether it is one as to which persons acting honestly, and viewing the scheme laid before them in the interests of those whom they represent, take a view which can be reasonably taken by businessm en."
22. In the case in hand from the facts and figures, already given it is quite clear that the proposed scheme of amalgamation, has been approved by overwhelming majority of the company as such the statutory requirement has been fully satisfied I, therefore hereby sanction the Scheme. In the result I pass following order under section 287 of the Companies Ordinance so as to take effect at the same time as order sanctioning the Scheme of Arrangement takes effect in accordance with section 284 (3) of the Ordinance as follows:--
(i) an order under section 287(1) (a) of the Companies Ordinance, 1984 transferring to and vesting in the petitioner No, 2 the whole undertaking of the petitioner No, 1 together with all its property assets rights, liabilities and obligations of every description including those described in paragraph 2 of the Scheme of Arrangement as set-forth in Annexure 'A' hereto;
(ii) an order under section 287(1) (b) of the Companies Ordinance, 1984 directing the petitioner No,2 to allot 1.5 ordinary shares of the nominal value of Rs,10 credited as fully paid up in the petitioner No,2 for every one ordinary share of the nominal value of Rs,10 each credited as fully paid up in the petitioner No,1 to the registered holders of those shares in the petitioner No,1 and directing that the determination of the registered holders of the shares in the petitioner No,1 and their respective entitlement to such ordinary shares of petitioner No,2 the treatment of fractional entitlement and the allotment of such shares and delivery of share certificates by the petitioner No, 2 shall be in accordance with paragraphs 4, 5 and 6 of the Scheme of Arrangement as set forth in "Annexure A" hereto, and that for this purpose the Register of Members of the petitioner No,1 shall be closed for a period of seven days prior to and inclusive of the date fixed by the directors of the petitioner No,2 by reference to which the registered holders of the ordinary shares of the petitioner No,1 are to be determined for entitlement to ordinary shares of the petitioner No,2 and that notice of such closure shall be given to the Members of the petitioner No,1 in the manner provided in the Articles of Association of the petitioner No,1;
(iii) an order under section 287(1) (c) of the Companies Ordinance, 1984 directing that all legal proceedings instituted by or against the petitioner No,1 which may be pending shall be continued by or against the petitioner No,2;
(iv) an order under section 287(1) (d) of the Companies Ordinance, 1984 declaring the dissolution without winding up, of the petitioner No,1 so as to take effect from the date on which the ordinary shares of the petitioner No,2 are allotted to the holders of the ordinary shares of the petitioner No,1 in accordance with the Scheme of Arrangement as set forth in "Annexure A" hereto.
23. After hearing the learned counsel for petitioners Nos.1 and 2 by short order I have granted the application. These are the reasons for the same.