2016 (7) TMI 1654 - HC - Companies Law

Reduction of share capital - procedure prescribed under Section 101(2) of the Companies Act, 1956 was dispensed with - HELD THAT - The Petitioner Company states that the Petitioner has complied with all the statutory requirements as per the directions of this Court and they have filed necessary affidavit of compliance in the Court. Moreover, Petitioner Company also undertakes to comply with statutory requirements, if any, as required under the Companies Act, 1956 and the Rules made thereunder. No objector has come forward to oppose the proposed reduction. Since the requisite statutory procedure has been fulfilled, the Company Scheme Petition is made absolute - Application allowed.

Summary

Issues: Reduction of Share Capital under Section 100 to 105 of the Companies Act, 1956.

Analysis:
The judgment delivered by B.P. Colabawalla, J. of the Bombay High Court pertains to a petition for the reduction of share capital by a company. The counsel for the petitioner highlighted that the company had the authority under Clause 4(B) of its Articles of Association to reduce its share capital as per the provisions of the Companies Act, 1956. The shareholders had consented to the reduction during an Extra Ordinary General Meeting held on 3rd June, 2016. The proposed reduction involved canceling a significant number of equity shares and preference shares, adjusting against the debit balance of the Profit & Loss Account, and making cash payments to the shareholders. The Securities Premium Account of the company was also set to be reduced accordingly. The Special Resolution supporting the reduction was annexed to the petition.

Regarding compliance, the counsel assured the court that all statutory requirements had been met, and necessary affidavits of compliance were filed. The petitioner undertook to fulfill any additional statutory obligations under the Companies Act, 1956 and its relevant rules. No objections were raised against the proposed reduction, and since all statutory procedures were followed, the court made the Company Scheme Petition absolute as per the prayer clauses (a) and (b). The filing and issuance of the drawn-up order were dispensed with, and all concerned parties were instructed to act based on an ordinary copy of the order and the authenticated form of minutes attached to the petition.

Furthermore, the petitioner was directed to publish notices in specific newspapers circulating in Mumbai to inform about the registration of the order and the reduction minutes by the Registrar of Companies, Maharashtra. The publication in the Maharashtra Government Gazette was waived off. This comprehensive judgment ensures that the reduction of share capital by the company is conducted in accordance with the legal provisions and with due diligence towards fulfilling all necessary requirements and notifications.