9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 1674 - Tri - Insolvency and BankruptcyReduction of the share capital of the Applicant Company - allegation is that the affidavit dated 18.09.2017 filed by the Respondent Number 3. (Regional Director) has not been taken into consideration before the pronouncement of the order on 04.10.2017 - HELD THAT - Since the company viz., M/S. Reed Relays Electronics India Limited did not choose to get its shares listed with any one of the recognised exchanges, it ceases to be a listed company vide SEBI circular dated 30.05.2012. Hence, the reference in the RD's Affidavit that the guidelines prescribed by the SEBI should have been followed in the conduct of voting by the shareholders is not sustainable. The same is also applicable with respect to the observation made by the RD vide Para No.6 regarding the application of the company's finance to provide an exit opportunity for non-promoter shareholders - this Bench observes that the shareholders' meeting is as per the provisions of the Companies Act, 2013 and the relevant rules provided there under. Hence, for a company which is not a listed company, it cannot be expected to follow the SEBI guidelines regarding the conduct of the meeting. This Tribunal confirms the reduction of share capital of Applicant Company by approving the minutes of Special Resolution dated 12.12.2016 passed by the shareholders for reduction of share capital - the necessary alteration shall be made in the Memorandum of Association by reducing the amount of share capital and of its shares accordingly by the Applicant Company. Application allowed.
Issues:
1. Consideration of affidavit by Regional Director before passing the order. 2. Valuation methods for reduction of share capital. 3. Compliance with SEBI regulations for valuation and shareholder exit. 4. Appointment of an independent valuer as per SEBI guidelines. Issue 1: Consideration of affidavit by Regional Director before passing the order The National Company Law Tribunal (NCLT) initially approved the reduction of share capital of the Applicant Company. However, an objector filed an appeal, leading to the Hon'ble NCLAT setting aside the order due to the non-consideration of an affidavit by the Regional Director (RD). The NCLAT directed the NCLT to consider the affidavit and provide an opportunity for all parties to argue on the matter. Issue 2: Valuation methods for reduction of share capital The RD's affidavit highlighted that the company used the Discounted Cash Flow (DCF) method for valuation, but the valuation report was not shared with shareholders before approving the resolution. The objectors argued that the Net Assets Value (NAV) method would have resulted in a higher valuation per share compared to the DCF method. The RD questioned why certain assets and liabilities were not considered in the DCF valuation, leading to discrepancies in the valuation methods used. Issue 3: Compliance with SEBI regulations for valuation and shareholder exit The RD raised concerns about the company not following SEBI guidelines for shareholder exit and valuation. However, the NCLT clarified that for a company not listed with any recognized exchange, SEBI guidelines regarding conduct of meetings may not be applicable. The RD's assertion of compulsory exit for non-promoter equity shareholders was deemed flawed as the company was considered a 'going concern' entity. Issue 4: Appointment of an independent valuer as per SEBI guidelines The RD pointed out that the company did not appoint an independent valuer from SEBI's panel for valuation, as mandated by SEBI regulations. However, the SEBI counsel later clarified that the appointment issue was not pressed as the relevant SEBI notification postdated the auditor's appointment, thus having no retrospective effect. SEBI did not have any other objections in the matter. In conclusion, after re-hearing the case, the NCLT confirmed the reduction of share capital of the Applicant Company based on the special resolution passed by the shareholders. The NCLT approved the reduction from Rs. 1,07,68,090 to Rs. 43,48,470 by cancelling shares held by non-promoter shareholders. The necessary alterations in the Memorandum of Association were directed to be made, and compliance with filing requirements was outlined for the Applicant Company.
|
