2021 (5) TMI 941 - Tri - Companies Law

Seeking reduction of share capital of the Petitioner Company - HELD THAT - The Special Resolution as approved by the shareholders in their Extraordinary General Meeting held on 13.05.2020 is hereby confirmed. The Company shall, within thirty days hence, publish the confirmation of the reduction of share capital in the same newspapers (i.e. Free Press Journal and Navshakti) having circulation in the state of Maharashtra, as required under section 66(4) of the Act. It may also be published on the website, if any, of the Company. The Petition for reduction of share capital is allowed.

Summary

Issues:
Reduction of share capital under section 66 of the Companies Act, 2013.

Analysis:
The Petitioner Company sought a reduction of its share capital under section 66 of the Companies Act, 2013. The company had passed a Special Resolution on 23.09.2019 for the reduction of its equity paid-up share capital. The Board of Directors deemed it appropriate to undertake a financial restructuring exercise for a rationalized capital structure. The original reduction amount was from ?57,04,32,630 to ?53,14,32,630 by canceling and extinguishing paid-up equity share capital of ?3,90,00,000. Subsequently, a revision was proposed on 13.05.2020 to reduce the capital to ?55,12,14,180 by canceling and extinguishing paid-up equity share capital of ?1,92,18,450. An amendment application for this revision was filed and allowed by the Tribunal.

The Regional Director submitted a report with observations, including the need for an affidavit to protect the interests of creditors and stakeholders, clarification on tax implications, and scrutiny of the scheme to ensure compliance with Section 68 of the Companies Act, 2013. The Petitioner Company responded to each observation, providing necessary affidavits and explanations. The Tribunal verified and accepted the responses, ensuring compliance with statutory requirements.

The Petitioner Company also highlighted compliance with FEMA regulations allowing 100% foreign investment under the Automatic Route for manufacturing companies. The company undertook to comply with FEMA provisions post-approval of the reduction of capital. Moreover, the company assured compliance with all statutory requirements under the Act and applicable rules.

After considering the submissions, observations, and records, the Tribunal was satisfied to allow the Petition for reduction of share capital. The order confirmed the Special Resolution approved by shareholders and outlined specific requirements for publication, approval of minutes, delivery to the Registrar of Companies, and action by regulatory authorities. The approved reduction of share capital was detailed in the minutes provided by the Tribunal for compliance and record-keeping purposes.