SUBX.L Regulatory News (SUBX)

15 Jan 2008 13:11

Subex Limited15 January 2008 To The London Stock Exchange London United Kingdom Sub: Notice of Extraordinary General Meeting on January 28, 2008 to consider theScheme of arrangement for transferring the Services Business of the company toSubex Technologies Limited, a wholly owned subsidiary. This is to inform that the Services Division of the company is being transferredto Subex Technologies Limited, a wholly owned subsidiary of the company. In this connection, the Hon'ble High Court of Karnataka has directed the companyto convene a meeting of the Equity Shareholders at 03.00 P.M (IST), UnsecuredCreditors at 10.00 A.M (IST) and Secured Creditors at 11.30 A.M (IST) of theCompany on January 28, 2007 to consider and approve the Scheme of Arrangementfor making the aforesaid transfer. The Scheme of Arrangement forms part of the aforesaid Notice This is for your information and records. For Subex Limited Raj Kumar Chief Counsel & Company Secretary SCHEME OF ARRANGEMENT UNDER SECTIONS 391 TO 394 OF THE COMPANIES ACT, 1956 BETWEEN SUBEX LIMITED (Transferor Company) WITH SUBEX TECHNOLOGIES LIMITED (Transferee Company) AND their respective share holders and creditors PREAMBLE A. Description of Companies: a. Subex Limited, a public company limited by shares incorporated underthe provisions of the Companies Act, 1956, was originally incorporated as SubexSystems Limited on December 06, 1994. The name clause of the Memorandum of Association of the said company was changedfrom 'Subex Systems Limited' to 'Subex Azure Limited' which was subsequentlyaltered to 'Subex Limited' vide resolution of members passed on November 26,2007. The aforementioned company is presently known by its name 'Subex Limited'(hereinafter referred to as the 'Transferor Company') The Equity shares of the Transferor Company are listed at the Bombay StockExchange Limited and the National Stock Exchange of India Limited. The ForeignCurrency Convertible Bonds and Global Deposit Receipts issued by the TransferorCompany are listed at London Stock Exchange. The situation clause of the Memorandum of Association specifies that theregistered office is located in the State of Karnataka and accordingly, the sameis located at Adarsh Tech Park, Outer Ring Road, Deverabisannalli, Bangalore-560 037. The main objects of the Transferor Company are reproduced hereinbelow: 1. To carry on all kinds of businesses of designers, manufacturers,processors, assemblers, dealers, traders, distributors, importers, exporters,agents, consultants, system designers and contractors for erection andcommissioning on turnkey basis or to deal in any other manner including storing,packing, transporting, converting, repairing, installing, training, servicing,maintenance of all types, varieties and kinds of satellite communicationequipments and accessories including VSA Terminals, Hub stations suitable forvoice, date, and facsimile communications, other communication equipmentsincluding Fibre optic instruments, telephone instruments, inter-coms,accessories, cables and components thereof: Radio and mobile communicationequipments like receivers, transmitters, trans-receivers, walkie talkie, radiorelay equipment, point to point communication equipments, antennas andassociated equipment, single channel, multi-channel, fixed frequency, variablefrequency, static, mobile, airborne, shipborne equipments I HF, UHF andMicrowave spectrum, and associated equipments, sonic, ultrasonic and coding anddata transmission equipments, data acquisition, processing and loggingequipments, display terminals; Signaling, telecommunication and controlequipments, used in roads, railways, ships, aircrafts, ports, airports, railwaystations, public places along with associated accessories and test rigs andinstruments, testing equipments, accessories for repair, maintenance,calibration and standardization of all the aforementioned items in laboratories,service centers, processing plant, manufacturing plant and at customers places. 2. To manufacture, produce, assembly, buy, sell distribute, lease,import, export, exhibit, use, manipulate, work or otherwise deal in all kinds ofMachinery, Equipment and aids used for Manufacture of the above equipments. 3. To install, operate, maintain, lease, hire, sell acquire, deal inprivate communication networks including telephone exchanges, satellitestations. The Transferor Company is presently engaged in the followingbusinesses in the telecommunication industry: i. Developing software products ('Products Business'); and ii. Staff augmentation services ('Services Business') The Transferor Company is a provider of software solutions in the operationssupport systems area for telecom applications. This area can broadly beclassified into service fulfillment, service assurance and revenue maximization.The Transferor Company has traditionally been operating in the revenuemaximization space, but has expanded into the service fulfillment spaceconsequent to the acquisition of Syndesis Limited, Canada. While revenuemaximization solutions improve the revenues and profits of the communicationservice providers through identification and elimination of leakages in theirrevenue chain, service fulfillment solutions enable the carriers to fulfill theneeds of their subscribers through provisioning and activation of services. TheTransferor Company conceptualizes and develops software products at itsfacilities located in Bangalore and is focused on the telecom business segment. The latter business, namely the Services Business, is primarily catering to thetelecommunication industry in the United States of America. b. Subex Technologies Limited is a public company limited by shares wasincorporated on December 03, 2005 under the provisions of the Companies Act,1956. The Transferee Company is presently known by its name 'Subex TechnologiesLimited' and is a wholly owned subsidiary of the Transferor Company (hereinafterreferred to as the 'Transferee Company'). The situation clause of the Memorandum of Association specifies that theregistered office is located in the State of Karnataka and accordingly, the sameis located at Adarsh Tech Park, Outer Ring Road, Deverabisannalli, Bangalore-560 037. The main objects of the Transferee Company are reproduced herein below: 1. To carry on all kinds of businesses of developing,implementing, servicing, erecting, offering consultancy services, assembling,dealing, distributing, importing, exporting, acting as system integrators,contractors, agents in all areas of Information Technology and Software sectorsincluding all related services, projects or products for all industrial,commercial and services sectors, and to offer, both to individuals and tocompanies all services and advice concerning information technology and toengage in manufacture, develop, offer training activities and to otherwiseengage in business of information technology providing Information TechnologyEnabled Services (ITES) including but not limited to software developmentservices, eCRM services, customer acquisition and retention services, Customercontact/Call centers, Transcription Services, Internet Service Providers,Internet related business providers, Business Process Outsourcing, Back OfficeOperation and Management Services, Network Management Support, ElectronicPublishing, Revenue accounting, Claims Processing, Data Warehousing, DataMining, Data Modeling Services, IT Enabled Services for the entertainment andmedia industry including but not limited to Digitization of multi-media data,dubbing of audio video content in multiple languages, digitization/ publishingof print media, on demand printing of textual materials, Training Servicesassociated with above and any other related and permissible activities and tocarry out prevalent forms of electronic commerce activities as permitted underthe law over data networks, internet, broadband/ broadcast networks and todevelop instructional software and other materials and provide and franchiseeducational and training services in Software, Hardware, Tele-communications andother related areas in the field of Information technology area in India andOverseas and to provide onsite, offsite consulting services for clients in Indiaand Abroad and to provide and put up institutes/schools for this purpose. 2. To carry on the business of manufacturing and servicing ofall kinds of computer software and hardware, Radiology, nanotechnology relatedequipments/services, equipments and all related services in India & Abroad andallied products and for this purpose, design, determine, develop, integrate,maintain, market or deal in information systems, networks and related items inconnection with computers and telecommunication engineering and in general toprovide all types of information technology equipment and services to all typesof industries in India and abroad, and to act as placement agents, consultantsfor all above Industries, Institutions, organizations, and these could beprivate, government or public and to innovate new technologies in relation tosoftware tools, products, packages and services in all above areas. 3. To carry on the business in India and abroad, of buying,selling, reselling, hiring, leasing, licensing exporting, importing,transferring and otherwise to deal in all kinds of computer related componentsand technologies, software, nanotechnology, radiology and tele-radiologyservices and related equipments, instruments, hardware, software, connectivity,bandwidth, internet, setting up of technology parks and related offices andservices, medical transcription, health care solutions of all types and alsoperipheral products of all kinds including their services and business processoutsourcing. 4. To carry on the business in India and abroad asmanufactures, general contractors, suppliers, exporters and importers of anddealers of commodities, product goods, articles, things, software and servicesof every description and kind, that are necessary for attaining any of the abovemain objects. The Transferee Company is presently engaged in the business of rendering staffaugmentation services for Information Technology sector predominantly related tothe telecommunication sector. Both Transferor Company and the Transferee Company are companies under the samemanagement, the Subex Group. B. Rationale and Purpose of the Scheme of Arrangement Each of these two businesses carried on by the Transferor Company and itssubsidiary, Transferee Company have significant potential for growth. Till now,the management of the Transferor Company managed both the divisions with elan.However, in view of the fact that the Products Business has, in the recent past,achieved a threshold limit requiring focused attention of the management, themanagement of the Transferor Company has decided to re-organize the twodivisions by way of transfer of the Services Business to the Transferee Company. The nature of risk and competition involved in each of these businesses isdistinct from the other and consequently each business is capable of attractinga different set of investors, strategic partners, lenders and otherstakeholders. The manner in which these businesses are managed are alsodifferent. In order to concentrate on its key focus area, namely the ProductsBusiness, the Transferor Company proposes to re-organize the two distinctbusinesses by way of transfer of the Services Business (as hereinafter defined)to the Transferee Company through a Scheme of Arrangement under the provisionsof the Companies Act, 1956. Each of these businesses requires a focused leadership, independent management,distinct identity with a view to augment the tremendous growth and profitabilitypotential. Hence, with the re-organization and transfer of the Services Businessto the Transferee Company, the management shall be able to provide the desiredlevels of focus as required by each distinct business. It is believed that this transfer of Services Business would enhance / augmentthe shareholders value and allow a focused course of action. The Scheme of Arrangement (as hereinafter defined) will also provide eachfurther scope for independent collaboration and expansion. With the aforesaid objectives, the Board of Directors of the Transferor Companyseeks to restructure its businesses by transferring the Services Business andvesting it with the Transferee Company, being the wholly owned subsidiarycompany of the Transferor Company. In this direction, an application is intended to be made to the Hon'ble HighCourt of Karanataka. PART I DEFINITIONS AND SHARE CAPITAL 1. Definitions In this Scheme unless repugnant to the meaning or context thereof, the followingexpressions shall have the meanings given to them below: - 1.1 'Act' means the Companies Act, 1956 or any statutory modification(s)or re-enactment thereof for the time being in force in India. 1.2 'Appointed Date' means September 01, 2007 or such other date as may benotified by the Hon'ble High Court of Karnataka. 1.3 'Effective Date' means the last of the dates on which conditions andmatters referred to in Clause 17 of this Scheme occur or have been fulfilled orwaived and the Order of the Hon'ble High Court of Karnataka sanctioning theScheme of Arrangement is filed with the Office of the Registrar of Companies,Karnataka at Bangalore by the Transferor Company and the Transferee Company.References in this Scheme to the date of 'coming into effect of this Scheme' or'becoming effective' or 'effectiveness of this Scheme' shall mean the 'EffectiveDate'. 1.4 'Liabilities means all debt(s) (whether secured and unsecured loans),liabilities (including contingent liabilities), duties and obligations,responsibilities, and commitments of the Transferor Company of every kind,nature and description, whatsoever and howsoever accruing or arising out of, andall loans and borrowings raised or incurred pertaining to and in connection withthe Services Business (as hereinafter defined). 1.5 'Parties' shall mean the Transferor Company and the Transferee Companycollectively. 1.6 'Remaining Business' means all business of the Transferor Companyother than those comprised in the 'Services Business' (as hereinafter defined)of the said company. 1.7 'Scheme' or 'Scheme of Arrangement' means the Scheme of Arrangement asset out herein in its present form or with any modification(s) as approved orimposed or directed by the Hon'ble High Court of Karnataka. 1.8 'Services Business' means the staff augmentation services carried onby the Transferor Company and includes its branch office located at 255, Old NewBrunswick Road, Suite S240, Piscataway NJ 08854, United States of America alongwith: - a. all assets or proportion thereof; b. all Liabilities or proportion thereof; c. investments of the Transferor Company in Subex Technologies, Inc,a wholly owned subsidiary incorporated under the provisions of New Jersey laws,United States of America and having its registered office located at 255, OldNew Brunswick Road, Suite S240, Piscataway NJ 08854, United States of America; d. the entire services business as a going concern on the AppointedDate. Without prejudice to the generality of the above, the Services Business andundertaking shall include all rights, privileges, powers and authorities and allproperty moveable and immoveable, real or personal, corporeal or incorporeal, inpossession or reversion, tangible or intangible, freehold or leasehold, fixed orcurrent, present or contingent of whatever nature and wheresoever situated,including computers and telecommunication equipments, computer hardware,software and programs, plant and machinery, office equipment, furniture andfixtures, vehicles, sundry debtors, cash and bank balances, loans and advances,deposits, buildings, godowns, warehouses, offices, inventories, bills ofexchange, peripherals and accessories, receivables, investments, goodwill,investments in shares, debentures, bonds, mutual funds, approvals, permissions,licenses, consents, exemptions, registrations, incentives from Government/Regulatory authorities, no objection certificates and certifications, permits,quotas, rights, entitlements, tenancies, trademarks, service marks, technicalknow how, trade names, descriptions, trading style, franchise, labels, labeldesigns, colour schemes, utility models, holograms, bar codes, designs, patents,copy rights, privileges and any rights, title and interest in intellectualproperty, benefits of contracts, agreements, letters of credit, guarantees,letters of comfort and all other rights including lease rights, licensesincluding those relating to trademarks or service marks, powers and facilitiesof every kind, nature and description whatsoever of the Transferor Company andits branch to which the Transferor Company is entitled to and all debts (whethersecured or unsecured), liabilities (including contingent liabilities), duties,responsibilities, commitments and obligations of the Transferor Company on theAppointed Date but specially excludes any thing in relation to or in connectionwith the Products Business of the Transferor Company. Other expressions used in this Scheme and not expressly defined herein shallhave the same meaning as is given to them in the Act. 2. Share Capital 2.1 The share capital structure of the Transferor Company as per itsaudited Balance sheet as on March 31, 2007 is as hereunder: Authorised Capital Rs. 50,00,00,000/- (Rupees Fifty Crore) divided into i. 4,80,40,000 (Four Crore Eighty Lakh Forty Thousand) Equity shares ofRs. 10/- (Rupees Ten) each; and ii. 2,00,000 (Two Lakh) Convertible Cumulative Preference shares of Rs.98/- (Rupees Ninety Eight) each. Issued Subscribed and Paid Up Capital: Rs. 34,81,57,250 (Rupees Thirty Four Crore Eighty One Lakh Fifty Seven ThousandTwo Hundred Fifty) divided into 3,48,15,725 (Three Crore Forty Eight LakhFifteen Thousand Seven Hundred and Twenty Five) equity shares of Rs. 10/-(Rupees Ten) each. Of the above: i. 1,15,000 (One Lakh Fifteen Thousand) shares of Rs. 10/- (Rupees Ten)each were allotted for consideration other than cash; ii. 46,26,940 (Forty Six Lakh Twenty Six Thousand Nine Hundred Forty)shares of Rs. 10/- (Rupees Ten) each were allotted as bonus shares bycapitalization of General Reserve; iii. 12,840 (Twelve Thousand Eight Hundred Forty) shares of Rs. 10/-(Rupees Ten) each are allotted in part settlement of cost of acquisition ofsubsidiary; iv. 1,08,78,784 (One Crore Eight Lakh Seventy Eight Thousand SevenHundred Twenty Four) shares of Rs. 10/- (Rupees Ten) each are allotted as bonusshares by capitalization of securities premium; and v. 1,17,28,728 (One Crore Seventeen Lakh Twenty Eight Thousand SevenHundred Twenty Eight) shares of Rs. 10/-(Rupees Ten) each are allotted in fullsettlement of cost of acquisition of Azure Solutions (UK) Limited. 2.1.1 The share capital structure of the Transferor Company as per theunaudited / provisional Balance sheet as on August 31, 2007 is as hereunder: Authorised Capital: Rs. 50,00,00,000/- (Rupees Fifty Crore) divided into i. 4,80,40,000 (Four Crore Eighty Lakh Forty Thousand) Equity shares ofRs. 10/- (Rupees Ten) each; and ii. 2,00,000 (Two Lakh) Convertible Cumulative Preference shares of Rs.98/- (Rupees Ninety Eight) each. Issued Subscribed and Paid Up Capital: Rs. 34,84,10,610 (Rupees Thirty Four Crore Eighty Four Lakh Ten Thousand SixHundred Ten) divided into 3,48,41,061 (Three Crore Forty Eight Lakh Forty OneThousand Sixty One) equity shares of Rs. 10/- (Rupees Ten) each. Of the above: i. 1,15,000 (One Lakh Fifteen Thousand) shares of Rs. 10/- (Rupees Ten)each were allotted for consideration other than cash; ii. 46,26,940 (Forty Six Lakh Twenty Six Thousand Nine Hundred Forty)shares of Rs. 10/- (Rupees Ten) each were allotted as bonus shares bycapitalization of General Reserve; iii. 12,840 (Twelve Thousand Eight Hundred Forty) shares of Rs. 10/-(Rupees Ten) each are allotted in part settlement of cost of acquisition ofsubsidiary; iv. 1,08,78,784 (One Crore Eight Lakh Seventy Eight Thousand SevenHundred Eighty Four) shares of Rs. 10/- (Rupees Ten) wach are allotted as bonusshares by capitalization of securities premium; and v. 1,17,28,728 (One Crore Seventeen Lakh Twenty Eight Thousand SevenHundred Twenty Eight) of Rs. 10/-(Rupees Ten) each are allotted in fullsettlement of cost of acquisition of Azure Solutions (UK) Limited. The paid up share capital of the Transferor Company as on August 31,2007 has increased on account of vesting of equity shares under the employeesstock option schemes. 2.2 The share capital of the Transferee Company, a wholly owned subsidiaryof the Transferor Company as per the audited Balance Sheet as on March 31, 2007is as hereunder:- Authorised Capital: Rs. 3,00,00,000/- (Rupees Three Crore) divided into 30,00,000 (Thirty Lakh)Equity shares of Rs. 10/- (Rupees Ten) each. Issued Subscribed and Paid Up Capital: Rs.99,99,940/- (Rupees Ninety Nine Lakh Ninety Nine Thousand Nine Hundred Forty)divided in to 9,99,994 (Nine Lakh Ninety Nine Thousand Nine Hundred Ninety Four)Equity shares of Rs. 10/- (Rupees Ten) each held by the Transferor Company. Thebalance 6 (Six) shares are held by the nominees of the Transferor Company. 2.2.1 The share capital structure of the Transferee Company as per theunaudited / provisional Balance sheet as on August 31, 2007 is as hereunder: Authorised Capital: Rs. 3,00,00,000/- (Rupees Three Crore) divided into 30,00,000 (Thirty Lakh)Equity shares of Rs. 10/- (Rupees Ten) each. Issued Subscribed and Paid Up Capital: Rs.99,99,940/- (Rupees Ninety Nine Lakh Ninety Nine Thousand Nine Hundred Forty)divided in to 9,99,994 (Nine Lakh Ninety Nine Thousand Nine Hundred Ninety Four)Equity shares of Rs. 10/- (Rupees Ten) each held by the Transferor Company. TheBalance 6 (Six) shares are held by the nominees of the Transferor company. 3. Operative Date of the Scheme: The Scheme set out herein shall be operative from the Appointed Date but shallbecome effective on the Effective Date. PART II 4. Transfer of the Services Business of the Transferor Company Upon coming into effect of this Scheme and with effect from the Appointed Date,the Service Business of the Transferor Company shall stand transferred and vest,as a going concern, in the Transferee Company including the following : 4.1 Transfer of Assets a. The entire Services Business of the Transferor Company along with allconcerned assets, both movable, immovable, subject to charges, if any,(including all the estate, assets, rights, claims, title, interest andauthorities including accretions and appurtenances of the Services Business)shall, pursuant to the Scheme being sanctioned by the Hon'ble High Court ofKarnataka under the provisions of Sections 391 to 394 and other applicableprovisions, if any, of the Act, without any further act or deed, be transferredto and vested in or deemed to have been transferred to and vested in theTransferee Company as a going concern, so as to become the estate, assets,rights, title, interest including accretions and appurtenances thereto such asdividends or other benefits received including in particular any securitiesacquired or received by the Transferor Company of the Transferee Company,subject, however, to all charges, liens, mortgages and any other security, ifany, then affecting the same or part thereof. b. all assets or investments, rights, title or interest acquired by theTransferor Company after the Appointed Date but prior to the Effective Date inrelation to and in connection with the Services Business shall also, without anyfurther act, instrument or deed, be and stand transferred to and vested in andbe deemed to have been transferred to and vested in the Transferee Company uponcoming into effect of this Scheme pursuant to the provisions to Sections 391 to394 of the Act. 4.2 Contracts, deeds, etc a. All contracts, deeds, bonds, agreements, schemes, arrangements andother instruments of whatsoever nature pertaining to and in connection with theServices Business to which the Transferor Company is a party or to whom thebenefit under the aforementioned documents would accrue and which are subsistingor have effect before the Effective Date shall continue in full force and haveeffect on or against or in favour of, as the case may, the Transferee Company asif the same were, in the first instance, were entered into or has been partythereto by the Transferee Company. b. All statutory and other licenses, registrations, permissions,approvals, consents, certificates, clearances, authorities, powers of attorneygiven by, issued to or executed in favour of the Transferor Company andpertaining to and in connection with the Services Business of the said Companyshall upon coming into effect of this Scheme be vested in or transferred to theTransferee Company without any further act or deed and shall be appropriatelymutated by the statutory and other authorities concerned in favour of theTransferee Company. Consequently, all the benefits under the statutory andregulatory permissions, factory licenses, environmental approvals and consents,value added tax registration and other registrations, licenses and consentsshall vest in and become available to the Transferee Company pursuant to thisScheme. c. In the event if any assets (estates, claims, rights, title, interestin or authorities relating to such assets or contracts or deeds, bonds,agreements or other instruments or whatsoever owned by or accrued to theTransferor Company and pertaining to and in connection with the ServicesBusiness, which for some reason cannot be transferred or vest in the TransfereeCompany, the same shall be held in trust for the benefit of the TransfereeCompany in so far it is permissible so to do until such time the transfer iseffected. d. All rights and licenses relating to trademarks, know-how, technicalknow-how, trade names, description trading style, franchise, labels, labeldesigns, colour schemes, utility models, holograms, bar codes, designs, patents,copyrights, privileges and any rights, title or interest in intellectualproperty rights, tenancies, powers, facilities of every kind and description ofwhatsoever nature pertaining to or in connection with the Services Business ofthe Transferor Company to which the Transferor Company is a party to or to thebenefit of which the Transferor Company may be entitled / eligible and which aresubsisting or to have effect on the Effective Date, shall be in full force andeffect on, or against, or in favour of, the Transferee Company as the case maybe, and may be enforced as fully and effectually as if, instead of theTransferor Company, the Transferee Company has been a party or beneficiary orobliged thereto. 4.3 Transfer of Investment(s) All investment(s) made by the Transferor Company (pertaining to and inconnection with the Services Business) in any body corporate(s), partnership(s),Company(ies), association of person(s) (whether incorporated or unincorporatedor any other entity, specifically in the body corporate, namely SubexTechnologies Inc., United States of America, having its registered officelocated at 255, Old New Brunswick Road, Suite S240, Piscataway NJ 08854, USA,United States of America shall stand transferred and consequently vest in theTransferee Company. 4.4 Transfer of Liabilities a. all debts (unsecured or secured) including rupee and foreign currencyloans, term deposits, borrowings, liabilities, loan raised and used, liabilitiesand obligations incurred , duties or obligations of any kind, nature ordescription (including contingent liabilities) of the Transferor Company (inrelation to and in connection with Service Business) shall also be and standtransferred and be deemed to be vested in the Transferee Company on a goingconcern basis, without any further act or instrument or deed pursuant to theScheme being sanctioned by the Hon'ble High Court of Karnataka under theprovisions of Section 394 (2) of the Act so as to become the debts, liabilities,duties and obligations of the Transferee Company and the Transferee Companyshall be responsible to discharge and satisfy the same. In this regard, it shallnot be necessary to obtain the consent of any person who is a party to thecontract or arrangement by virtue of which such debts, liabilities etc. b. where any debts including rupee and foreign currency loans, termdeposits, borrowings, liabilities, loan raised and used, liabilities andobligations incurred, duties or obligations of any kind, nature or description(including contingent liabilities) are incurred by the Transferor Company (inrelation to and connection with Service Business) after the Appointed Date andbefore the Effective Date, the same shall be deemed to have been incurred forand on behalf of / on account of the Transferee Company and the shall be deemedto have been transferred /vested in the Transferee Company and shall become thedebts, liabilities, duties and obligations of the Transferee Company upon thescheme become effective. c. all liabilities and obligations arising out of guarantee(s) executedby, and / or security(ies) provided by the Transferor Company in relation to andin connection with the Services Business shall upon the scheme becomingeffective shall be transferred and vest in the Transferee Company. 5. Transfer of Services Business All assets, properties and liabilities of the Services Business ofthe Transferor Company shall be transferred to the Transferee Company at thefair value as determined by the report of the Chartered Accountant on the closeof business on August 31, 2007. 6. Legal Proceedings Upon the coming into effect of this Scheme, all suits, actions, legal and otherproceedings by or against the Transferor Company in relation to and inconnection with the Services Business pending and/or arising on or before theEffective Date shall be transferred in the name of the Transferee Company andshall be continued and be enforced by or against the Transferee Company aseffectually and in the same manner and to the same extent as if the same hadbeen pending and/or arisen by or against the Transferee Company. 7. Conduct of the business With effect from the Appointed Date and up to and including the Effective Date,the Transferor Company shall: a. carry on and be deemed to carry on all the business and activities inrelation to and in connection with the Services Business of the TransferorCompany and shall hold and stand possessed of and shall be deemed to hold andstand possessed of all the estates, assets, rights, title interests,authorities, contracts, investments and strategic decisions of the TransferorCompany for and on account of, and in trust for, the Transferee Company. b. all profits and income accruing or arising to the Transferor Companyfrom its Services Business, and losses and expenditure arising out of orincurred by it (including taxes) shall for all intents or purposes be treated asthe income, profits, losses or expenditure, as the case may be, of or incurredby the Transferee Company. c. carry on the business and activities in relation to and in connectionwith the Services Business with reasonable diligence and business prudence andshall always take into consideration the interests of the Transferee Companywhich in terms of this Scheme will be acquiring the Services Business in totohitherto carried on by it and shall not have the right to undertake financialcommitments or sell, transfer, alienate, charge, mortgage, encumber or otherwisedeal with or dispose of the said business or any part thereof except in theordinary course of its business, or with the prior written consent of the Boardof Directors of the Transferee Company. d. accretions and depletions of the Services Business shall be for andon account of the Transferee Company. 8. Payment of Tax All taxes, duties, levies, cess and of like nature paid or payable by theTransferor Company in relation to and in connection with Services Business afterthe Appointed Date and before the Effective Date, shall be on account of theTransferee Company and, in so far it relates to such payments the same shall bedeemed to be the tax paid by the Transferee Company, and shall, in allproceedings, be dealt with accordingly. Part-III Re-organization of Capital 9. Provisions to prevail The provisions of this part shall operate notwithstanding anything to thecontrary in this Scheme. 10. Reorganization of share capital 10.1 In consideration of the transfer and vesting of the Services Business ofthe Transferor Company to the Transferee Company in accordance with and as anintegral part of this Scheme, the capital clause of the Memorandum ofAssociation of the Transferee Company shall be increased / augmented with therequisite amount to accommodate the consideration payable (as agreed upon) tothe Transferor Company. Consequently, the existing Clause V (a) and Clause 2(a) of theMemorandum of Association and the Articles of Association of the TransfereeCompany respectively shall be substituted by the following clause: 'The Authorised Share Capital of the Company is Rs. 6,00,00,000/- (Rupees SixCrore) divided into 60,00,000 (Sixty Lakh) of Rs. 10/- (Rupees Ten) each.' 10.2 The aggregate consideration payable for transferring the ServicesBusiness of the Transferor Company to the Transferee Company, as a goingconcern, as per the valuation report of the Chartered Accountant has beenarrived at a sum of Rs. 31,00,00,000/- (Rupees Thirty One Crore) payable,without further any act or deed, in the following manner: i. issue and allot 30,00,000 (Thirty Lakh) Equity shares of Rs. 10(Rupees Ten) each as fully paid-up in the capital of the Transferee Company tothe Transferor Company as soon as the Scheme of Arrangement is approved by theHon'ble High Court of Karnataka, such period, however, shall not exceed 90(Ninety) days from the Effective Date. The aforesaid sum of Rs 3,00,00,000/-(Rupees Three Crore) shall be treated as a Share Capital Suspense Account in thebooks of account of the Transferee Company until the shares are issued andallotted by the Transferee Company to the Transferor Company in accordance withthis Scheme. ii. the balance consideration of an amount of Rs. 28,00,00,000 (RupeesTwenty Eight Crore) would be treated as an interest free un-secured loan in thebooks of account of the Transferee Company payable on demand to the TransferorCompany. 10.3 The new equity shares issued and allotted by the Transferee Company interms of this Scheme shall be subject to the provisions of the Memorandum andArticles of Association of the Transferee Company and shall inter-se rank paripassu in all respects. 10.4 Upon coming into effect of this Scheme, the deficit arising under theScheme, being the excess of the amount of the value of the Services Business atbook value over the value of the Services Business as per the Scheme, shall bedebited to the share premium account in the books of the Transferor Company. PART IV Remaining Business 11.1 The Remaining Business and all its assets, liabilities and obligationspertaining thereto shall continue to belong to and be vested in and be managedby the Transferor Company. All legal or other proceedings by or against theTransferor Company under any statute, whether pending on the Appointed Date orwhich may be instituted prior to the Effective Date and relating to theRemaining Business (including those relating to any property, right, power,liability, obligation or duties of the Transferor Company in respect of theRemaining Business) shall be continued and enforced by or against the TransferorCompany, which shall keep the Transferee Company fully indemnified in thatbehalf. The Transferee Company shall in no event be responsible or liable inrelation to any such legal or other proceeding against the Transferor Company. 11.2 All legal, taxation proceedings whether civil or criminal (including anystatutory or quasi judicial authority or tribunal by or against the TransferorCompany under any statute, whether pending on the Appointed Date or which may beinstituted thereafter in relation to the Remaining Business shall be continuedby or against the Transferor Company after the Effective Date. The TransfereeCompany shall not be in any event responsible or liable in this regard. In theevent, such proceedings are initiated by or against the Transferee Company, thesame shall be prosecuted / defended in accordance with the advise rendered bythe Transferor Company at the cost of the Transferor Company and the lattershall reimburse and indemnify the Transferee Company against all liabilities andobligations incurred by the Transferee Company in respect thereof. PART - V Accounting 12.1. Upon the Scheme becoming effective, except as otherwise provided herein,the accounting treatment in respect of the assets of the vested ServicesBusiness in the books of account of the Transferee Company will be determined atthe fair value of these assets as determined by a chartered accountant. 12.2 Upon coming into effect of this Scheme, the deficit arising under theScheme, being the excess of the amount of the value of the Services Business atbook value over the value of the Services Business as per the Scheme, shall bedebited to the share premium account in the books of the Transferor Company. PART - VI General Terms and Conditions 13. The Transferee Company shall have the right to use the 'Subex' branduntil revoked by the Transferor Company at its discretion. 14. Filing of applications The Transferor Company and the Transferee Company shall make andfile, all necessary applications and petitions before the Hon'ble High Court ofKarnataka for the sanction of the Scheme of Arrangement under the provisions ofSection 391 and 394 of the Act and each of them shall apply for all necessaryapprovals as may be required under law. 15. Amendment / Modification of the Scheme 15.1 The Transferor Company and the Transferee Company may jointly assentfrom time to time on behalf of all persons concerned to any modifications oramendments or additions to the Scheme or to any conditions or limitations whichthe Hon'ble High Court of Karnataka and/or other competent authorities, if any,under any law may deem fit and approve of or impose and which the TransferorCompany and the Transferee Company may in their discretion deem fit and mayresolve all doubts or difficulties that may arise for carrying out the Schemeand do and execute all acts deeds, matters and things necessary for bringingthe Scheme into effect and to make the Scheme compliant with the laws ofRepublic of India. The aforesaid powers of the Transferor Company and theTransferee Company may be exercised by their respective Board of Directors orcommittees of the concerned boards. 15.2 For the purpose of giving effect to the Scheme or any modifications oramendments thereof or additions thereto, the delegates of the Transferor Companyand the Transferee Company may jointly give and are hereby authorized todetermine and give all such directions as are necessary including directions forsetting or removing any directions, as the case may be, which shall be bindingon all Parties in the same manner as if the same were specifically incorporatedin the Scheme. 15.3 In the event of any of the conditions that may be imposed by the Courtand / or authority, while sanctioning the Scheme, which the Board of Directorsof the Transferor Company and the Transferee Company may find unacceptable forany reason, then the Transferor Company and the Transferee Company are atliberty to withdraw the Scheme. 16. Effect of non receipt of approvals In the event of the approvals or conditions enumerated in this Scheme not beingobtained or complied with, or for any other reason, the Scheme cannot beimplemented, the Board of Directors of the Parties shall mutually waive ormodify such conditions as they consider appropriate to give effect, as far aspossible, to this Scheme and failing such mutual agreement, or in case theScheme is not approved by the Hon'ble High Court of Karnataka, the Scheme shallbecome null and void. 17. Scheme Conditional Upon This Scheme is conditional upon the following approvals / events and the Schemeshall be deemed to be effective on obtaining last of the approvals and theoccurrence of the following events: - a. the requisite consent, approval or permission of the Government /Statutory agencies and any other regulatory authority in India which by law maybe necessary for the implementation of this Scheme; b. the Scheme being agreed to by the requisite majorities of the membersand creditors of the Transferor Company and Transferee Company, as requiredunder the Act; c. the Scheme being sanctioned by the Hon'ble High Court of Karnataka;and d. the certified copy of the Order of the Hon'ble High Court is filedbefore the Registrar of Companies, Karnataka at Bangalore. 18. Costs, charges and expenses Upon the Scheme becoming effective, all costs, charges, taxes including stampduties, levies and all other expenses, if any, of the Transferor Company and theTransferee Company arising out of /or incurred after the Effective Date forcarrying out and implementing the Scheme and matters incidental thereto shall beborne and paid by the Transferor Company. This information is provided by RNS The company news service from the London Stock Exchange