2004 (4) TMI 320 - HC - Companies Law

Summary

Issues:
Approval of Minutes to Transfer of Capital Reserves to Profit and Loss Account under sections 100, 101, and 102 of Companies Act, 1956.

Analysis:
The petitioner, M/s. Allianz Capital and Management Services Ltd., sought approval for transferring the balance in the Share Premium Account and Debentures Forfeited Account to the Profit and Loss Account. The resolutions passed in the extraordinary general meeting authorized these transfers. The company's Articles of Association were altered to facilitate the reduction of Share Capital. The registered office of the petitioner is within the territorial jurisdiction of the High Court of Delhi.

The petitioner provided various documents supporting the petition, including the Memorandum and Articles of Association, shareholding pattern, income tax returns, list of creditors, Balance Sheet, and Profit and Loss Account. The company's financial details were outlined, showing the authorized share capital, paid-up capital, outstanding debts, and losses incurred over time. The losses were attributed to various factors like the recession in the investment sector and business losses.

The petitioner-company unanimously passed a special resolution to transfer the balances of the Share Premium Account and Debentures Forfeited Account to the Profit and Loss Account, thereby moving the 'Capital Reserves' to the Profit and Loss Account. The transfer was considered a 'Deemed Reduction of Capital' despite not involving an actual reduction of capital or cash outflow to shareholders. The Registrar of Companies had no objections to this transfer.

The High Court allowed the petition, approving the Form of Minutes for the transfer of Capital Reserves to the Profit and Loss Account. The approved minutes were to be registered under section 103(1)(b) of the Companies Act, and a copy was to be filed with the Registrar of Companies within six weeks. The petitioner was directed to publish a notice of registration in 'Hindustan Times' and 'Nav Bharat Times'. The petition was disposed of accordingly.