This alert
summarizes a recent order1 dated 31 October 2018 passed by the
National Company Law Tribunal, Ahmedabad bench (NCLT), approving the scheme of
arrangement involving Demerger of an undertaking of Sun Pharma Global FZE
(Demerged Company/Transferor Company / SPGF) into Sun Pharmaceutical Industries
Limited (Resulting Company/Transferee Company/APL) under section 234 read with
sections 230-232 and other applicable provisions of the Companies Act, 2013
(the Scheme).
In the given Scheme, the Transferor Company is a Foreign Company incorporated in UAE whereas the Transferee Company is a Listed Indian Company where it envisages transfer of assets and liabilities from a foreign company into an Indian Company via demerger under NCLT approval process. It also envisioned that the Transferee Company will not issue any shares or pay consideration to the shareholders of the Transferor Company since the Transferor Company is an indirect wholly owned subsidiary of the Transferee Company. Further, the Regional Director had filed observations to the scheme. However, the said scheme was approved by the NCLT clarifying objections and providing conditions to be complied by the Transferee Companies wherever applicable from a tax and regulatory perspective.
It is interesting precedent to note where the NCLT has looked into Company Law and RBI/foreign exchange regulations and approved the scheme but as far as tax implications are concerned it has directed respective companies to abide by the same in accordance with the law post the Scheme.
In the given Scheme, the Transferor Company is a Foreign Company incorporated in UAE whereas the Transferee Company is a Listed Indian Company where it envisages transfer of assets and liabilities from a foreign company into an Indian Company via demerger under NCLT approval process. It also envisioned that the Transferee Company will not issue any shares or pay consideration to the shareholders of the Transferor Company since the Transferor Company is an indirect wholly owned subsidiary of the Transferee Company. Further, the Regional Director had filed observations to the scheme. However, the said scheme was approved by the NCLT clarifying objections and providing conditions to be complied by the Transferee Companies wherever applicable from a tax and regulatory perspective.
It is interesting precedent to note where the NCLT has looked into Company Law and RBI/foreign exchange regulations and approved the scheme but as far as tax implications are concerned it has directed respective companies to abide by the same in accordance with the law post the Scheme.
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