ORDER SHEET

Order Sheet

IN THE HIGH COURT OF SINDH KARACHI

J. Misc. No. 08 of 2015

Date	Order with signature of Judge

For hearing of Main Petition :

Petitioners : (1) Jaffer Brothers (Private) Limited, and

(2) Jaffer Business Systems (Private) Limited,

through Jahanzeb Awan Advocate.

SECP : Through Mr. Munawwar Ahmed Advocate.

Date of hearing : 23.12.2015.

O R D E R

NADEEM AKHTAR, J. – This petition has been filed under Section 284 of the Companies Ordinance, 1984, for the sanction of the Scheme of Arrangement set forth in Annexure ‘C’ to the petition, for transferring to and vesting in Jaffer Business Systems (Pvt.) Limited (petitioner No.2) all those assets of Jaffer Brothers (Pvt.) Limited (petitioner No.1) which form part of its computer division i.e. the ‘JBS Undertaking’, as defined in the Scheme of Arrangement. The petitioners have prayed as under :

“ i. Serve notice of this Petition on the Registrar of Companies at the following address :

Registrar of Companies, Companies Registration Office, Securities & Exchange Commission of Pakistan, 4^th Floor, State Life Building No.2, Wallace Road, off. I. I. Chundrigar Road, Karachi, Pakistan ;

ii. Convene a statutory meeting of the members of the Petitioner No.1 and appoint Mr. Khwaja Mohammed Qasim as the chairman of such meeting ;

iii. Convene a statutory meeting of the members of the Petitioner No.2 and appoint Mr. Khwaja Mohammed Qasim as the chairman of such meeting ;

iv. Dispense with the need to convene a statutory meeting of the creditors of the Petitioner Nos. 1 & 2 ;

v. An order under S. 284(2) of the Companies Ordinance, 1984, sanctioning the Scheme as set forth in Annexure ‘C’ to this Petition, so as to make the Scheme binding on the Petitioners and their respective members and creditors ;

vi. An order under S. 287(1)(a) of the Companies Ordinance, 1984 transferring to and vesting in the Petitioner No.2, the whole of the ‘JBS Undertaking’, as defined in the Scheme, together with all its properties, assets, rights, (including (but not limited to the right to claim having worked on computer / IT related projects since 1982, and having performed / implemented / supplied the projects carried out by the Computer Division of JBL) liabilities, encumbrances and obligations of every description as more particularly described in the Scheme, which transfer and vesting shall take effect on and from the Effective Date (as defined in the Scheme), and the bifurcation of the Petitioners’ balance sheets, and heads of account (including the share premium account) as mentioned in the Management Accounts ;

vii. An order under S. 287(1)(b) of the Companies Ordinance directing the Petitioner No.2 to allot ordinary shares of par value of Rs.100/- as per the ratios specified in Article 10.1 of the Scheme ;

viii. An order under S. 287(1)(c) of the Companies Ordinance directing that any and all legal proceedings pending by or against the Petitioner No.1 (if any) shall, as of the Transfer Effective Date (as defined in the Scheme), continue by or against the Petitioner No.2.

ix. Pass such orders or issue such directions as this Hon’ble Court may deem fit and proper in the circumstances.”

2. Both the petitioner-companies were incorporated and are existing under the Companies Ordinance, 1984, (‘the Ordinance’) as private limited companies. Their objects are set forth in their respective Memorandums and Articles of Association, copies whereof are attached to the petition. Petitioner No.1, which was incorporated in the year 1948, has an authorized capital of Rs.10,000,000.00 divided into 100,000 shares of Rs.100.00 each, and an issued, subscribed and paid up capital of Rs.9,628,800.00 divided into 96,288 shares of Rs.100.00 each. Petitioner No.2 was incorporated in the year 1999 for the purpose of absorbing the JBS Undertaking. It has an authorized share capital of Rs.50,000,000.00 divided into 500,000 ordinary shares of Rs.100.00 each, and an issued, subscribed and paid up capital of Rs.3,000.00 divided into 30 shares of Rs.100.00 each. Both the companies are part of the Jaffer Brothers Group of Companies, having common directors.

3. The principal object of the Scheme of Arrangement submitted for the approval of this Court is the transfer of the JBS Undertaking, as defined in the Scheme of Arrangement, from petitioner No.1 to petitioner No.2 against the issuance of ordinary shares of petitioner No.2 to the shareholders of petitioner No.1. The Scheme of Arrangement provides that petitioner No.2 will issue shares to the shareholders of petitioner No.1 in such proportion that the shareholders of petitioner No.1 will receive the same percentage of shares in petitioner No.2 as they presently hold in petitioner No.1. The names of the shareholders, their current shareholding in petitioners 1 and 2, the post-demerger position of their shareholding, number of shares of petitioner No.2 to be issued in their names, and the applicable swap ratio, have been given in detail in the Scheme of Arrangement as well as in the petition. It is stated that the rights and securities of the creditors of petitioner No.1 will not be affected in case the Scheme of Arrangement is sanctioned. It is further stated that petitioner No.2 is currently not conducting any business whatsoever and as such it only has nominal debts.

4. It is also stated that none of the existing secured creditors of petitioner No.1 has any objection to the Scheme of Arrangement, and petitioner No.1 has already obtained no objection / consent letters from creditors representing 100% (in value) of the secured creditors and 78% (in value) of the total creditors. In support of the above, the petitioners have filed a certificate issued by Ernst & Young Ford Rhodes Sidat Hyder, Chartered Accountants. It is contended that the statutory requirement under Section 284 of the Ordinance to obtain the approval of 75% of the creditors has been complied with by the petitioners. It is further contended that no investigation or the like proceedings are pending in relation to any of the petitioners under Section 263 or under any other provisions of the Ordinance or under any other law for the time being in force.

5. In compliance of the order passed on 07.05.2015, notice of the petition was published in the Gazette of Pakistan dated 12.08.2015, and also in daily newspapers ‘Dawn’, ‘The News’ and ‘Jang’ on 23.05.2015. Notice was also affixed on the Court notice board and it was issued to the Additional Registrar of Companies too. CMA No.87/2015 filed by the petitioners was allowed vide order dated 07.05.2015 to the extent of prayers (i) and (ii) made therein, whereby they were allowed to convene separate meetings of their respective members for approving the Scheme of Arrangement. In pursuance of the said order, meetings of the members of petitioners 1 and 2 were held on 01.06.2015 and a report of such meetings was submitted before this Court by the Chairman of the meetings through a statement dated 01.10.2015. As per the said report, after circulating a copy of the Scheme of Arrangement along with the statement of information under Section 286 of the Ordinance to the members of petitioners 1 and 2, separate meetings of petitioners 1 and 2 were held on 01.06.2015 with the requisite quorum, wherein 100% members voted in favour of the resolution for the sanction of the Scheme of Arrangement.

6. Para-wise comments were filed by SECP, wherein it was stated that this Court may pass any order as may be deemed fit and proper. In the statement / report submitted today by SECP, it is stated that the petitioners have furnished their latest annual audited accounts as at 30.06.2015 along with swap ratio, and as such SECP has no objection to the sanction of the Scheme of Arrangement.

7. I have examined the Scheme of Arrangement wherein the transfer of the JBS Undertaking from petitioner No.1 to petitioner No.2 against the issuance of ordinary shares of petitioner No.2 to the shareholders of petitioner No.1, as well as the procedure and the implications thereof, have been set forth in detail. In compliance of Section 284(2) of the Ordinance petitioners 1 and 2 have disclosed to the Court all material facts relating to them including their latest financial position and the latest audited accounts. The Scheme of Arrangement has been unanimously approved by the members of petitioners 1 and 2 in their respective meetings held with the permission of this Court. Thus, all legal and formal requirements for the sanction of the Scheme of Arrangement have been duly complied with by the petitioners.

8. The object of the Scheme of Arrangement, as stated therein, appears to be lawful, and it does not appear to be against the public interest / policy, or in violation of any law. Moreover, no investigation or the like proceedings are pending in relation to any of the petitioners under Section 263 or under any other provisions of the Ordinance or under any other law for the time being in force. In view of the above and also as the members of the petitioners have unanimously approved the Scheme of Arrangement, the petition is granted as prayed and the Scheme of Arrangement is hereby sanctioned.

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J U D G E