NCLT Chennai Allows First Motion For Sun Direct GO Merger With Parent Sun Direct TV

The National Company Law Tribunal at Chennai has allowed a first-motion application for the proposed amalgamation of Sun Direct GO Private Limited, which runs an OTT streaming platform, with its wholly owned parent, Sun Direct TV Private Limited, and dispensed with meetings of the Transferor Company's equity shareholders and creditors.

A coram of Judicial Member Jyoti Kumar Tripathi and Technical Member Ravichandran Ramasamy also dispensed with the requirement for Sun Direct TV to file a separate second motion application for sanction of the scheme.

While dispensing with a separate second-motion application by Sun Direct TV, the tribunal directed Sun Direct GO, the Transferor Company, to file the second motion application within 14 days of receiving the order.

Sun Direct GO was incorporated on June 24, 2024 and is a wholly owned subsidiary of Sun Direct TV. The companies approached the Tribunal under Sections 230-232 of the Companies Act, 2013 in relation to a Scheme of Amalgamation.

According to the companies, the Scheme is aimed at consolidating the businesses of the two entities, which operate in related sectors, by leveraging their synergies and collective strengths. The companies stated that the merger is expected to optimise resource allocation, improve operational efficiency and cost effectiveness, enhance productivity and strengthen competitiveness, thereby benefiting its stakeholders.

The Tribunal noted that Sun Direct GO had two equity shareholders, with Sun Direct TV holding 99.99% of its equity and that both shareholders had furnished consent affidavits representing 100% of the equity shareholding. It also noted that Sun Direct GO also had two unsecured creditors, who had similarly given 100% consent and that there were no secured creditors.

Considering the unanimous consents, the Tribunal dispensed with the requirement of convening meetings of the equity shareholders and unsecured creditors of Sun Direct GO. The requirement of convening a meeting of secured creditors was also dispensed with by the Tribunal as there were none.

On the issue of whether Sun Direct TV was required to file a separate application for sanction of the Scheme, the Tribunal referred to the precedents and observed:

“….there was no necessity of filing a separate petition by the Transferee Company if the merger is of a wholly owned subsidiary and its parent/holding company”

It therefore held that since Sun Direct GO is a wholly owned subsidiary of Sun Direct TV, there was no need to file a separate application for sanction of the Scheme. Accordingly, the Tribunal dispensed with the requirement for Sun Direct TV to file a second motion application.

The tribunal has disposed of the application directing Sun Direct GO to file the Second Motion application within 14 days.

For Applicants: PCS Swetha Subramanian