2012 (11) TMI 35 - HC - Companies Law

Reduction of Capital Redemption Reserve - Held that - The reduction of the Capital does not involve either diminution of liability in respect of the unpaid share capital or payment to any shareholder of any paid up Share Capital, and hence, there is no requirement to comply with Section 101 (2) of the Act. No objection has been received to the proposed reduction of Capital from any other party - Mr. Rajeev Vasudeva, Director and Authorized Signatory of the Petitioner Company has filed an affidavit dated 21.09.2012 confirming that no objection has been received by the Petitioner or their legal counsel pursuant to the notice of hearing published in the aforesaid newspapers. Thus considering the facts and circumstances of the present case, the Resolution dated 22.05.2012 and the Form of Minutes proposed at Annexure K to be registered under Section 103 (1) (b) for reduction of Capital Redemption Reserve of the Petitioner Company are approved.

Summary

Issues:
1. Approval sought for reduction of Capital Redemption Reserve by a company under Sections 80 and 100 to 104 of the Companies Act, 1956.
2. Compliance with statutory requirements for reduction of Capital Redemption Reserve.
3. Consent of equity shareholders for the proposed reduction of Capital.
4. Publication and registration requirements for the approved reduction of Capital Redemption Reserve.

Analysis:
1. The petition was filed seeking approval for the reduction of Capital Redemption Reserve by a company under Sections 80 and 100 to 104 of the Companies Act, 1956. The company proposed to reduce the Capital Redemption Reserve by a specific amount and utilize it for adjusting deferred tax assets and impairment in the value of assets as per the resolution passed by the Board of Directors.

2. The petition included details such as the company's registered office, capital structure, memorandum, articles of association, and audited balance sheet. The special resolution for the reduction of Capital Redemption Reserve was passed at an Extraordinary General Meeting, and it was highlighted that the reduction did not involve certain liabilities or payments to shareholders, exempting it from specific compliance requirements.

3. The equity shareholders consented to the proposed reduction of Capital Redemption Reserve through a Special Resolution passed at the Annual General Meeting. No objections were received from any other party regarding the reduction, as confirmed by the Director and Authorized Signatory of the company.

4. The High Court approved the reduction of Capital Redemption Reserve as proposed by the company, directing the adjustments to be made in accordance with the resolution. The Court ordered the registration and publication of the approved reduction, along with dispensing with certain formalities related to the company's name. Additionally, the company agreed to deposit a sum with the Common Pool Fund of the Official Liquidator within a specified timeframe.

In conclusion, the Court allowed the petition for the reduction of Capital Redemption Reserve, ensuring compliance with statutory provisions and shareholder consent while outlining the necessary steps for registration, publication, and additional requirements related to the approved reduction.