National Company Law Tribunal (NCLT) has approved the proposed demerger scheme of Emaar MGF Land Ltd that will pave the way for joint venture partners Dubai’s Emaar Properties and India’s MGF Development go separate ways.
Approving the scheme, the tribunal said the “liabilities and duties” related to the assets demerged from Emaar MGF Land would be vested with the resultant company—MGF Developments. Dubai’s realty major Emaar Properties and India’s MGF Developments decided to end their 11-year-old joint venture (JV) in April 2016.
Emaar Properties, which entered India in 2005 with largest foreign direct investment (FDI) in the realty sector, has invested about Rs8,500 crore in the Indian real estate market through the joint venture. In a 14-page order, NCLT said that “all the property, rights and powers of the demerged undertaking of the demerged company be transferred… to the resulting company”.
Under the scheme, demerged company is Emaar MGF Land Ltd while resulting firm is MGF Developments Ltd. The demerged undertaking includes part of the construction and development business of Emaar MGF Land. “All the liabilities and duties of the demerged undertaking of the demerged company be transferred without further act or deed to the resulting company…,” the order said.
The tribunal also said that all proceedings now pending by or against the demerged undertaking of Emaar MGF Land be continued by or against the resulting company. Emaar MGF Land Ltd had filed the demerger scheme with the Delhi high court in 16 May.
“The scheme provides for the demerger of an undertaking, being part of the construction and development business of Emaar MGF Land Ltd (demerged company) to MGF Developments Ltd (resulting company)…,” Emaar MGF Land had said in May 2016. As per the scheme, the development right of 1,685 acres would be transferred to MGF Developments.
The scheme provides for consequent issue of shares by the MGF Developments to the shareholders of the Emaar MGF Land, except to the extent shares held by the resulting company in the demerged company. As per the scheme, MGF Developments would issue 9 equity shares of Rs10 each for every 416 shares held in the Emaar MGF Land, as a consideration for the demerger of the demerged undertaking, to shareholders of the JV firm.
All the shareholders of Emaar MGF Land would become the shareholders of MGF Developments as per the ratio given in the scheme. Various present and future liabilities will get transferred to MGF Development including Rs713 crore of debentures of Emaar MGF Land Ltd, people in the know had said.
Source: Mint