2002 (8) TMI 774 - HC - Companies Law

Summary

Issues:
Confirmation of reduction of Share Capital under Companies Act, 1956.

Detailed Analysis:
The petitioner, a company registered under the Companies Act, 1956, filed a petition for the confirmation of the reduction of Share Capital. The petition sought approval for the reduction of capital resolved by special resolution, approval of proposed minute, and any other necessary orders in the interest of the company and its shareholders.

The company's authorized capital was Rs. 8,00,00,000 divided into 80,00,000 equity shares of Rs. 10 each, of which a certain number of shares were fully paid up and partly paid up. The company, after incorporation, had been successfully conducting its business.

The petition highlighted the provision in the Articles of Association allowing the company to reduce its capital by special resolution. Due to shareholders defaulting in payment of allotment/call money, the company opted for reducing the subscribed share capital instead of forfeiting shares, as permitted by the Act and the Articles of Association.

A special resolution was passed by the company to cancel a specific number of partly paid shares and make necessary payments for the remaining shares. The reduction resulted in a new subscribed and paid-up share capital. The liability of shareholders was reduced, and the number of shares held by them was adjusted accordingly.

The court ordered the publication of notices in newspapers and gazettes, following which no opposition was raised by creditors or shareholders. Consequently, the reduction of share capital was confirmed, and the company's authorized and subscribed share capital was adjusted accordingly.

A certified copy of the order was to be delivered to the Registrar of Companies for registration. The order and related minutes were to be published in designated newspapers and gazettes. As a result, the company petition was disposed of.

This detailed analysis covers the confirmation process of the reduction of Share Capital under the Companies Act, 1956, as per the judgment delivered by the High Court of Rajasthan.