GB Global Limited announces an acquisition

The scheme does not provide an equity share-exchange ratio. The approved transaction is actually the merger of GB Global Limited (Transferor) into Dev Land & Housing Private Limited (Transferee), rather than DLH merging into GB Global. Because DLH already held 99.93% of GB Global, no DLH equity shares are to be issued in exchange; DLH’s existing shares in GB Global will be cancelled on the effective date. ^{[1] [2]}

For eligible public shareholders of GB Global, the approved consideration is:

• Rs 120 per GB Global equity share, plus
• One Rs 10 redeemable preference share of DLH for every GB Global equity share held. ^[3]

Impact on capital and promoter holding

• Post-merger equity share capital: There is no increase in DLH’s equity share capital arising from a share exchange, since no DLH equity shares are issued to GB Global shareholders under the scheme. The exact post-merger rupee amount and number of DLH equity shares are not stated in the cited Scheme extracts.
• Promoter holding: The transaction does not cause equity dilution through the merger consideration. However, the exact post-merger promoter holding percentage in DLH cannot be calculated from the cited extracts because DLH’s pre-merger equity share count and promoter share count are not provided. The 99.93% figure refers to DLH’s holding in GB Global, not its post-merger ownership percentage in DLH. ^[2]

Thus, the economic effect is a cash-and-preference-share exit for GB Global’s public shareholders, with no equity-share issuance or exchange-driven dilution in the surviving DLH entity.

The transaction direction is the reverse of the premise: under the NCLT-approved scheme, GB Global Limited is the Transferor and Dev Land & Housing Private Limited (DLH) is the Transferee. Therefore, the undertaking of GB Global—not DLH—is vested in DLH. GB Global is dissolved without winding up once the scheme takes effect. ^{[4] [5]}

Assets and liabilities transferred

The cited scheme extracts do not reproduce a complete asset-wise schedule with carrying values. They do, however, identify the following:

• Assets/rights of GB Global: the undertaking would include its business assets and rights; the proceedings specifically refer to a Sewri factory building valued at Rs 1,475.46 lakhs, although the property was stated not to be held in GB Global’s name and remained subject to a title dispute. ^[6]
• Inter-corporate receivable: GB Global had advanced a loan to its wholly owned subsidiary, Flowline Developers Private Limited; the loan was stated to have been authorised under Section 186 of the Companies Act. ^[7]
• Liabilities: all liabilities relating to GB Global’s undertaking transfer to DLH, including secured and unsecured debt, whether in Indian rupees or foreign currency; sundry creditors; contingent liabilities; duties; obligations; and other liabilities arising from or used in its business. Associated charges, encumbrances, liens and securities also transfer, with DLH assuming liabilities outstanding on the Effective Date on the same terms. ^[8]

Thus, this is not a transfer of DLH’s asset and liability pool into GB Global. It is an absorption of GB Global’s undertaking into DLH.

Effect on debt-to-equity and net worth

No numerical change in consolidated debt-to-equity or net worth is reported in the NCLT order extracts. The order records only that both petitioner companies had positive net worth; it does not provide the pre-merger debt, equity, net worth, or post-merger consolidated figures. ^[9]

The accounting effect should therefore be understood as follows:

• GB Global’s outstanding debt and other liabilities become liabilities of DLH after the Effective Date. ^[8]
• GB Global’s assets and receivables also move to DLH, subject to scheme accounting and any eliminations, including the cancellation of DLH’s existing shares in GB Global because DLH is the transferee and parent. ^[1]
• Consequently, the surviving entity’s debt-to-equity ratio could rise, fall or remain broadly unchanged depending on the relative size and valuation of the transferred assets, liabilities and equity adjustments. The legal order alone does not quantify the direction or magnitude.
• GB Global itself has no post-merger standalone net worth or debt-to-equity ratio, because it ceases to exist as the transferor. The relevant post-transaction metrics would be those of DLH or the combined surviving entity, and those figures are not reported here.

Effective Date: The NCLT order establishes an Appointed Date of 1 April 2024, but the cited order does not specify a separate fixed calendar date for the merger’s “Effective Date.” The scheme instead makes effectiveness dependent on completion of statutory and implementation steps. ^[10]

Conditions and timelines

• ROC filing: The companies must file the NCLT order together with the authenticated Scheme of Arrangement in e-Form INC-28 within 30 days of receiving the order. ^[11]
• Stamp-duty adjudication: They must lodge the order and Scheme with the Superintendent of Stamps for adjudication of stamp duty, if applicable, within 60 days of receiving the order. ^[11]
• Delisting compliance: The Transferor must complete the procedural requirements under the SEBI Delisting Regulations, submit the required documents and confirmations to SEBI, the stock exchanges and other authorities, and complete the stock exchanges’ checklist for in-principle delisting approval. ^[12]
• Share cancellation and RPS issuance: The GB Global equity shares are to be cancelled and delisted, and exchanged for the scheme-provided RPS after completion of the entire delisting process. ^[12]
• Regulatory objections: BSE and NSE had argued that an NOC, MPS compliance and delisting-law compliance were preconditions. However, the Tribunal sanctioned the scheme after concluding that an adequate public-shareholder exit mechanism existed and recorded that the successor company and relevant officers would remain liable for pre-merger violations. ^{[13] [14]}

Accordingly, the 30-day and 60-day periods are express post-order compliance deadlines, while completion of the delisting process is an important implementation condition. The order text cited here does not state that the Effective Date is automatically the order date or the date of receipt.

Debt and contingent liabilities

The scheme expressly transfers GB Global’s, not Dev Land and Housing’s, liabilities to Dev Land and Housing. Upon the scheme becoming effective, all secured and unsecured debt, creditors, obligations, charges, liens, security interests and contingent liabilities of the Transferor are transferred to and vested in the Transferee without requiring separate third-party consent. Dev Land and Housing assumes and must discharge those liabilities on the same terms, to the extent outstanding on the Effective Date. ^[8]

There is no cited provision for reclassifying or separately assuming Dev Land and Housing’s pre-existing debt or contingent liabilities. Those liabilities belong to the continuing Transferee; the specific assumption clause addresses liabilities inherited from GB Global. Separately, liabilities for offences committed by GB Global’s officers before the merger continue under Section 240 of the Companies Act, and tax authorities retain the right to examine tax consequences arising from the scheme. ^{[5] [5]}