- NCLT refuses to sanction merger
resulting in benefit only for promoters; rules that merger not in
the public interest;
- Rules that hypothetical tax
liabilities should be dealt with prior to grant of sanction, not
post grant of sanction.
- Tax authorities raise objections;
Allege merger is an impermissible avoidance arrangement subject to
the GAAR
Recently, the National Company Law Tribunal
("NCLT") refused to sanction a scheme of
amalgamation between Ajanta Pharma Limited
("AJL") and Gabs Investment Private
Limited ("GIPL") on the ground that the
scheme was designed purely for the avoidance of tax and was not in
the public interest.
Background
AJL is a listed Indian pharmaceutical company. GIPL is an
investment holding company owned and controlled by the promoters of
AJL. GIPL held 83,92,262 equity shares of AJL constituting 9.53% of
AJLs total paid up equity share capital. The total promoter
shareholding in AJL is set out in the diagram below.
