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2015 (5) TMI 876 - HC - Companies LawApplication for reduction in issued, subscribed and paid-up share capital under Sections 100 to 105 of Companies Act, 1956 and other applicable provisions of the Companies Act, 2013 read with Companies (Court) Rules, 1959 - Held that - It has been submitted by the petitioner that the equity shares of the petitioner company were listed and traded on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Delhi Stock Exchange (DSE) and Madras Stock Exchange (MSE). It is further submitted that one of the promoters of the petitioner company namely, Denso Corporation, holding 47.93% of the paid up capital of the company, vide its letter dated 26.04.2013 proposed to voluntarily delist the equity shares of the petitioner company from the aforesaid stock exchanges by acquiring upto 73,98,019 equity shares held by public shareholders in the petitioner company. Thereafter, Denso Corporation vide a public announcement dated 12.08.2013 made an offer to acquire the shares of the petitioner company and the final price for accepting the equity shares in the Delisting Offer was fixed at ₹ 145/- per equity share. It is further submitted that pursuant to the acquisition of the equity shares, Denso Corporation along with other promoter and promoter group shareholders of the petitioner company held 93.02% of the subscribed and paid up equity share capital of the petitioner company, as on 03.10.2013. It is further submitted that many of the shareholders for various reasons including change of address, improper contact details, misplaced share certificates and due to expiry of the offer date missed the exit opportunity given by the holding company and have been deprived of an opportunity to make liquid their investment, therefore, Denso Corporation gave a Final Exit Opportunity to remaining non promoter public shareholders, who had not tendered their shares in the Delisting Offer/whose tender of offer shares had been rejected in the Delisting Offer, to participate in the acquisition process for a period of one year from the date of delisting i.e. 05.11.2013 and is valid upto 04.11.2014. It is further submitted by the petitioner that as on 08.08.2014, the promoters of the petitioner company were holding 95.94% of the paid up capital of the company and the remaining 4.06% of the paid up capital of the company were held by non-promoters/public being approx. 8000 in number, which clearly indicate that large number of non promoter shareholders individually held insignificant shares. It is also submitted that even after sending the reminder letters to these shareholders, the said shareholders are not traceable due to various reasons and therefore the possibility of such shareholders offering their shares under the Final Exit Offer is highly improbable. It is further submitted that the Board of Directors of the petitioner company have decided to reduce the share capital of the company in accordance with the provisions of Sections 100 to 105 of the Companies Act, 1956 since in their view it is the only practical and economically efficient option available to the petitioner company in order to give exit opportunity to the shareholders since the shares held by them are no longer marketable and are illiquid stocks. Despite publication of notice, no objection has been received from any creditor or any member of the public. The petitioner company, in the affidavit dated 5th January, 2015 of Sh. N.P.S. Chawla, Advocate of the petitioner company has submitted that neither the petitioner company nor its counsel have received any objection pursuant to citations published on 20th November, 2014. Thus, there appears to be no legal impediment in allowing the present petition.In view of the averments made in the petition and there being no objection from any creditor or any member of the public, the petition is hereby allowed. - Application for reduction in Share capital allowed.
Issues:
1. Petition for confirming reduction of share capital under Sections 100 to 105 of Companies Act, 1956 and Companies Act, 2013. 2. Compliance with provisions of the Companies Act for reduction of share capital. 3. Approval of resolution passed at the Annual General Meeting for reduction of share capital. 4. No objections from creditors or public members regarding the proposed reduction of share capital. 5. Costs to be paid for examination of extensive records. Analysis: 1. The petition was filed by a company seeking confirmation for the reduction of its issued, subscribed, and paid-up share capital under Sections 100 to 105 of the Companies Act, 1956, and other relevant provisions of the Companies Act, 2013. The company had undergone name changes and had authorized, issued, subscribed, and paid-up share capital as detailed in the petition. 2. The petitioner company, having complied with the necessary procedures, submitted that the reduction of share capital was essential to provide an exit opportunity to shareholders, especially non-promoter public shareholders who were unable to participate in the delisting offer made by one of the promoters. The Board of Directors approved the reduction, and the company had obtained consents from unsecured creditors for the proposed action. 3. A special resolution confirming the reduction of share capital was passed at the Annual General Meeting, and the petitioner asserted that the reduction did not contravene any provisions of the Companies Act, 1956 or Companies Act, 2013. No investigation proceedings were pending against the company, and the resolution was sought to be approved by the court. 4. Despite publication of notices and compliance with formalities, no objections were received from creditors or the public regarding the proposed reduction of share capital. The Regional Director also raised no objection to the reduction, indicating no legal impediments to the petition. 5. The court allowed the petition, approving the resolution for the reduction of share capital passed at the Annual General Meeting. Directions were given for registration of the order with the Registrar of Companies and publication in specified newspapers. Additionally, costs of &8377; 2.0 lakhs were to be deposited by the petitioner for the examination of extensive records related to the matter.
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