2014 (11) TMI 1142 - HC - Companies Law

Reduction of capital seeked - Held that - Having considered the averments made in the petition and having perused the decision taken by the Board of Directors and also the resolution passed in the Annual General Meeting of the petitioner company, it is of the opinion that the prayer made in the instant petition is liable to be granted. Reduction of paid up share capital and Securities Premium Account subject to the approval of the share holders of the company and confirmation by this Court allowed.

Summary

Issues:
Approval of reduction of paid up equity share capital and Securities Premium Account as per special resolution dated 30.06.2014.

Analysis:
The petitioner, formerly known as AEG Power Solutions India Private Ltd., now TMEIC Power Electronic System India Pvt. Ltd., sought approval for reducing paid-up equity share capital and Securities Premium Account. The company, incorporated in 2006, engaged in manufacturing and trading power products, had accumulated significant losses. The Board of Directors proposed to restructure by reducing paid-up equity share capital and Securities Premium Account, subject to shareholder approval and court confirmation. The General Meeting on 30.06.2014 approved the reduction, leading to the petition before the High Court.

The Court directed the petitioner to publish notices in newspapers to allow interested parties to voice concerns. Despite no opposition, the Court examined the petition, Board decisions, and AGM resolutions. The Court found the petition deserving of approval due to the company's financial restructuring needs and compliance with legal provisions.

The Court allowed the petition, confirming the reduction of capital as per the AGM resolution. The resolution involved reducing issued, subscribed, and paid-up equity capital from Rs. 346,672,200 to Rs. 7,667,500 by adjusting against the debit balance in the Profit and Loss Account. The Securities Premium Account was also reduced by Rs. 450,771,928. The Court approved the minutes related to the resolution and ordered their delivery to the Registrar of Companies. Additionally, the Court mandated the publication of reduction notices and minutes in newspapers and filing copies with the registry within specified timelines.