1. Through this petitioner under section 284 read with section 287 of the Companies Ordinance, 1984 read with rule 60 of the Companies (Court) Rules, 1997, the petitioners, Yusuf Textile Mills Limited, Indus Tech Limited and M.R. Brothers (Pvt.) Limited have applied for amalgamation of the petitioners, amongst them. Petitioners Nos. 1 and 2 are public listed and unlisted company respectively with limited liability. Petitioner No,1 with share capital 'of Rs,300,000,000 with ordinary shares of Rs,10 each, out of which 6,360,535 ordinary shares are issued and fully paid-up, the remaining are unissued, whereas, petitioner No,2 with share capital of Rs,70,000,000 with 7,000,000 ordinary shares of Rs,10 each out of which 815.500 ordinary shares are issued and fully paid-up and remaining are unissued. The petitioner No, 3 is a private company with limited liability having shares capital of Rs,500,000 with 5000 ordinary shares Rs,100 each, all shares are issued and full paid-up.
2. The petitioner No,1 carries on business of manufacturing and sale of yarn and that petitioner No,2 is carrying on the business of electric generation and supply of power to the petitioner No, l whereas petitioner No,3 carries on business of Trading of Yarn and Cloths.
3. Majority of shareholders in all companies are common and companies belong to one group. It is maintained that there are no investigation proceedings under sections 263 to 282 or any other proceedings under any provision of the Companies Ordinance pending against any of the petitioner's company. With the object of better and more economically carrying on the business of the companies, it is proposed that petitioners Nos. 2 and 3 shall amalgamate with the petitioner No,1 and a scheme of amalgamation between the petitioners and its members has been prepared, whereby the entire business and assets and liabilities of petitioners Nos.2 and 3 shall vest in petitioner No,
1. The scheme is annexed P.7. It is their case that as a consideration for the transfer to and vesting, the petitioner No,1 shall issue at par and allot to the shareholders of petitioner No,2, 74,355 fully paid-up ordinary shares of petitioner No, 1 of the aggregate nominal value of Rs,743,550 and to issue at par and a lot to the shareholders of petitioner No,3,21,468 fully paid-up ordinary shares of petitioner No,1 of the aggregate value of Rs,214,680. On calculation of swap ratio prepared by Messrs M. Yousuf Adil Saleem & Co., Chartered Accountants, Annexure P-8. Under the scheme, the list of creditors has been updated prior to the scheme being sanctioned. Accordingly the rights and securities of the creditors of petitioners Nos. 2 and 3 will not in any way be diminished or significantly affected on account of the implementation of the scheme. The scheme has been adopted by the respective boards of directors.
4. C.M.A. No, 2092 of 2001, an application as contemplated by rule 953 of the Sindh Chief Court (0.S.)
5. Rules read with rule 55 of the Companies (Court) Rules, 1997, was filed in this Court. By order dated 13-7-2001, the petitioners were directed to call a General Body Meeting and to submit the report.
6. Pursuant to the order the required extraordinary general meeting in respect of the petitioners Nos. 1 and 2 was held on 17-9-2001, whereas, in respect of petitioner No, 3 said meeting was held on 15-9- 2001 at their registered Office. The scheme (P-7) was approved by the 100% vote, present in the meeting. The report has been placed on record in terms of the directions contained in order dated 13-7-2001.
7. The notice of this petition was also served on the Registrar Joint Stock Companies, who in his comments have raised the following objections:
1. That the petitioners have not properly disclosed before the Court about the pendency of any investigation proceedings in relation to all the companies.
2. The petitioner No, 3 has not cared to comply with the requirements of the Company Registration Office, Faisalabad letter containing observations/ objections in the returns documents filed by the company issued from on 7-1-1996 and subsequent reminders dated 26-1-1997, 19-2-1998, 18-11- 1998, 19-2-1999, 26-4-2000, 23-5-2001 and 20-8-2001.
3. The petition is not in accordance with the Form 19 prescribed under the Companies (Court)
8. Rules, 1997.
4. The petitioner No,1 company is going to take over the petitioners Nos.2 and 3 companies but it is incapacitated to take over the petitioner No, 2 company as it is not empowered to do the business as per object clause 3 of Memorandum of Associations, the petitioner No,2 company is doing business of electric power generation and supplying of power to industries and other consumers.
9. The petitioner No,1 the proposed transferee company is not competent to do the same as per Memorandum of Association.
5. The petitioner No,3 is not competent to amalgamate with another company in terms of its Memorandum of Association of the petitioner-companies.
6. That the NOC creditors relating to the petitioner No,3 are not in conformity with the record maintained by company Registration Office, Faisalabad. The particulars of mortgages and charges registered with CRO, Faisalabad from the inception of petitioner No,3 till the date of filing of petition in the report, which are as follows:--- Name and address of mortgageAmount secured by the mortgage/chargeDate of Registration/Modification of the charge.Date of satisfaction of mortgage/charge.
10. United Bank Limited, Bank Square, FaisalabadRs. 2,500,000 13-3-1979 -- Habib Bank Limited, Circular Road, Faisalabad.Rs. 3,000,000 24-5-1980 -- The objections raised by the Registrar have been met by the petitioners' counsel through reply and has replied all the objections during the hearing.
11. So far the objection regarding non-disclosure of any investigation proceedings regarding petitioners is concerned, Mr. A.H. Mirza has taken me through para. 6 of the petition, wherein the petitioners have specifically disclosed, such fact that there are no investigation proceedings under sections 263 to 282 or other similar proceedings under any provision of the Companies Ordinance pending against any of the petitioner-companies. The objection precisely is that such fact should have been disclosed through affidavit. The petition is supported by affidavit of Shafqat Masood, who is the Director of the petitioner No,1 and Executive Director of the petitioners Nos. 2 and 3, therefore, the objections raised have been substantially complied with and thus overruled.
12. Second objection was to the effect that objections to the returns/documents filed by the petitioner No, 3 raised through letter, dated 7-1-1996 and though subsequently reminders, were not complied with, Mr. A.H. Mirza has contended that the objections raised about the returns were already complied with and has referred Annexure D-1, issued on 25-10-2001 by the Joint Registrar of Companies, Faisalabad Region.
13. The third objection is that the petition is not in accordance with the Form 19 prescribed under the Companies (Court) Rules, 1997. With the assistance of the learned counsel for the petitioners, I have examined the provisions of 284 and 287, Companies Ordinance. There is no bar in filing the petition for approval and petition for holding of extraordinary general meeting simultaneously though the Form of the petition in terms of Rule 19 is given, if the petition substantially fulfils the requirements then such objection is not sustainable.
14. The fourth objection is in respect of the incapacitation on the part of the petitioner No,2 to do the business due to absence of such business in the object (power generation), Mr. A.H. Mirza in his reply has pleaded that petitioner No,2 is a captive power project and is supplying power only to the petitioner No,1 and after the merger of petitioner No,2 the petitioner No,1 will not carry on any business of power generation as a "business".
15. Since the petitioner No,1 will not carry on business of power generation as business, therefore, this objection is overruled, with the condition that the petitioner will not transact business of power supply to any Industrial and will generate power for the purpose of use by own unit.
16. Fifth objection is that the petitioner No,3 cannot be amalgamated in absence of such object, in its Memorandum and Article of Association, Mr. A.H. Mirza has taken me through the Memorandum of Association of petitioner No,3 (M.R. Brothers Limited) (P.3) and object of the petitioner, which contains such provision, which reads as follows:--- "to acquire an interest in, amalgamate with or to enter into any arrangement for sharing profits or for corporation or for limiting competition or from mutual assistance with any such person, firm or Company."
17. Therefore, this objection is not sustainable and has been raised without examining the Memorandum of Association.
18. The last objection relates to NOCs of the creditors relating to the petitioner No,3 are not in conformity with the record maintained by the Company Registration Office, Faisalabad, whereby mortgages were registered in favour of United Bank Limited, Bank Square, Faisalabad and Habib Bank Limited, Circular Road, Faisalabad. The creditor Habib Bank Limited has given no objection for the amalgamation, provided they shall retain and entitle for the same security as held by them on the transfer date. Therefore, this objection is also not tenable.
19. The creditors namely, Crescent Investment Bank Limited, Soneri Bank, Habib Bank Limited, Orix Investment Bank Pakistan Limited and Habib Bank A.G. Zurich have given their no objections for the amalgamation through Annexures P-12 to P-17. The advantages of amalgamation have been reflected in the statement of information (Annexure P-17), which are as follows:-- Petitioners viz. Yusuf Textile Mills Limited, Indus. Tech Limited and M.R. Brothers (Private) Limited belong to One Group and are also interlinked with each other.
20. The purpose of the amalgamation of all the three companies is to operate/run business under one management and avoid duplication of work.
21. The majority of Directors to the respective Board of the amalgamating companies are also common, as such the interest of shareholders will not be affected.
22. The maintenance of separate manufacturing operations, selling, purchasing, marketing, legal, administrative, secretarial and other records under the various laws results in duplication of work and higher costs.
23. The consolidated operation will result in eliminating duplicate services and operations and reduction in administrative and overhead expenses besides increasing efficiency on account of unified control.
24. The amalgamation will help in carrying on the business more economically and provide satisfactory organization framework conducive to the growth of the business.
25. In the event of amalgamation of all the three Companies, the administrative costs incurred individually by each company will be considerably reduced as: Only a single Board of Directors will be required to manage the affairs of the Company.
26. Only one AGM will be required to be held and one set of annual/half yearly accounts required to be published and circulated by the Company.
27. 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.
28. Single assessm ent for income-tax and sales tax and their filing and record keeping.
29. Amalgamation of the Companies would result in an improvement in the administration of personnel affairs of the staff and administrative policies will be uniform.
30. Yusuf Textile Mills Limited, Indus Tech Limited and M.R. Brothers (Private) Limited are associated companies, having common management. As the same team of key management and technical personnel will continue, there will be no disruption of business activity during the post amalgamation period.
31. The amalgamation is not opposed to public policy, nor against the interest of the creditors/shareholders, therefore, the same is approved in the following terms:--
(i) The scheme of Arrangement as set forth in Annexure P-7 is sanctioned and the same to be binding on the petitioners, their members and creditors.
(ii) The undertakings, business, assets and liabilities of the petitioners Nos. 2 and 3 as more particularly described in the scheme of arrangement as set forth in "Annexure P/7" hereto, as subsisting immediately preceding the completion date as defined in the Scheme are transferred to petitioner No,1.
(iii) The petitioner No,1 to allot to the shareholders of petitioners Nos. 2 and 3 within ninety days of the completion date as defined in the scheme in accordance with its terms ordinary shares of the nominal value of Rs,743,550 and Rs,214,680 respectively credited as fully paid-up in the petitioner No,1 to the shareholders of petitioners Nos.2 and 3 on or before or such date as the board
(iv) of directors of the petitioner No,1 may agree ("Final Date").
(iv) That all suits, appeals, arbitrations, governmental investigations and other legal proceedings instituted by or against petitioners Nos. 2 and 3 pending immediately before the completion date be treated as suits, appeals and legal proceedings by or against the petitioner No,1 and to continue, prosecute and enforce by or against the petitioner No,1 accordingly.
(v) Petitioners Nos. 2 and 3 shall stand dissolved without winding-up on the date on which ordinary shares of petitioner No,1 are issued to the shareholders of petitioners Nos. 2 and 3 in accordance with the scheme of arrangement/ amalgamation (Annexure P/7) to the petition).