Resolution of the Board of Transferor and Transferee Companies approving in principle the proposal to amalgamate Company X into Company Y.

Scheme of Amalgamation inter alia indicating Share Exchange Ratio will have to be prepared. This Ratio to be based on a Valuation Report preferably prepared by the Auditors of the Companies. The draft Scheme to be placed before the Board for approval.

An application u/s 391(1) of the Act by way of Summons for Directions alongwith Affidavit in Support is required to be filed by each Company in the High Court. The Summons would pray for directions such as:-

a) holding separate meetings of members, and creditors of the Companies to obtain their sanction to the Scheme;

b) fix time, place and date for holding such meetings;

c) Appoint Chairman for the meetings;

d) publication of notice in newspapers regarding date of meetings not less than
21 clear days before when the date of the meeting is fixed;

e) Service of the Notice by Certificate of Posting upon the members and creditors of the Companies meetings not less than 21 clear days before when the date of the meeting is fixed;

f) Procedure to be followed at the meetings including voting by proxy and report result thereof to the Court.

The Chairman appointed for the meeting will have to file an Affidavit not less than 7 days before date fixed for the meeting affirming that directions of the Court regarding issue of notices and advertisements have been complied with.

Within 15 days of the conclusion of the meetings the Chairman will be required to file a Report in the form of an Affidavit in the Court stating therein the result of the meetings i.e. whether members have voted for or against the Scheme. This Affidavit shall contain the number of creditors, class of creditors, number of members, class of members who were present and voted at the meeting either in person or by proxy, their individual values and the way they voted.

A Petition will then have to be filed by both Companies within seven days of filing the Chairman’s Report as aforesaid praying for Courts sanction to scheme based on approval of members and creditors.

The Petition after being numbered will be placed on Board for Directions. The Court will pass orders regarding fixing date of hearing of Petition and service of the Petition upon the Regional Director & Official Liquidator. Notice of hearing of Petition shall also have to be advertised in such papers as the Court may direct and not less than 10 days before date of hearing. The ROC & OL will have to submit a Report to the Court that the Scheme and the affairs of the Companies are not prejudicial to the interest of the members, creditors and public. The Official Liquidator in turn will appoint an Auditor (not the Statutory Auditor) from his panel to conduct an independent audit of the Transferor Company. The Report of the OL to the Court will be based upon the audit and its findings.

On the date of hearing the matter will placed on Board to consider whether all steps outlined above have been complied with. The Court will also satisfy itself on whether there is any opposition to the amalgamation by any member creditor, ROC or OL. If the Court is satisfied that the proposed Scheme has been approved by all concerned parties or that there is no opposition thereto and that the same is fair to all concerned the Court will pass appropriate orders sanctioning Scheme.

A draft order Sanctioning Scheme of Amalgamation will be drawn up by the Advocate of the Companies and submitted to the Company Registrar, High Court, Bombay for approval. The Company Registrar will then summon the ROC & OL at a meeting which will be held in his Chambers to approve the draft Drawn up Order. The Advocates for Companies at this meeting would submit that the Drawn Up Order be approved. Necessary directions according approval of the draft drawn up order will be passed by the Company Registrar after satisfying himself that the draft before him is in accordance with the order of the Court. Thereafter the Advocates will have to submit in triplicate engrossed sets of the "Order Sanctioning Amalgamation". The same will then the Sealed by the Court.

Sealed Order to be filed to with ROC after paying appropriate Stamp Duty since the same is required under the Bombay Stamp Act, 1958.

In carrying out the amalgamation, the Companies (Court) Rules 1959 (Rules 67 to 84 as well as Rules of the Bombay High Court (O.S.) will have to be adhered to.