2021 (8) TMI 985 - Tri - Companies Law

Reduction of share capital - cancellation of equity shares - HELD THAT - Various directions regarding issuance of various notices issued. Application disposed off.

Summary

Issues:
1. Confirmation of special resolution for share capital reduction.
2. Rationale for capital reduction.
3. Impact on shareholders and company structure.
4. Compliance with legal procedures for share capital reduction.

Analysis:
1. The Tribunal admitted the petition for confirmation of a special resolution passed by the Petitioner Company to reduce the shares in the share capital from 10,000 equity shares to 4,000 equity shares by canceling 3,000 equity shares each of two shareholders without payment of consideration. The special resolution was unanimously approved in an Extraordinary General Meeting. The purpose is to align individual and corporate shareholding, with individual shareholders holding 25% and corporate members holding the rest, aiming for a unified structure to prevent disputes and promote harmony within the family of individual shareholders.

2. The rationale for capital reduction includes aligning individual and corporate shareholding, maintaining a balanced shareholding pattern, and promoting long-term interests of the company and shareholders. The reduction is intended to create a unified structure beneficial for peace and harmony within the shareholder family, avoiding future disputes and litigation. The company aims to achieve these objectives through the reduction of share capital as per the provisions of Section 66 of the Companies Act, 2013, and relevant rules.

3. Post the reduction of share capital, the shareholding pattern of the company will be adjusted to ensure equal representation between individual and corporate shareholders. The company assures that the proposed capital reduction will not adversely affect its creditors, commitments, or obligations. No pay-out is planned for individual shareholders as a result of the reduction. The company is directed to serve notices to creditors and authorities, allowing them to submit objections or representations within specified timelines.

4. To comply with legal procedures, the Petitioner Company must serve notices to creditors, Registrar of Companies, and Central Government within seven days of the order. Notices must be published in specified newspapers in English and Marathi languages, inviting objections within three months. The company is required to submit a Compliance Report confirming the dispatch and publication of notices and must provide responses to objections or representations received within the stipulated period. Compliance with these procedures is essential for the Tribunal's approval of the share capital reduction.