2015 (5) TMI 237 - HC - Companies Law

Application for confirming the reduction of Equity Share Capital under Sections 100 to 104 of the Companies Act, 1956, read with Rules 11(a)(3) and 46 of the Companies (Court) Rules, 1959 - Permission for not to use Word 'and reduced' as last words after the company name - Held that - At this juncture, it is relevant to extract the Special Resolution passed by the petitioner Company in accordance with Section 189 of the Companies Act, 1956, at the Extra Ordinary General Meeting held at Chennai on 15th December, 2014. In this it was resolved that that the reduction shall be effected in the books of accounts of the Company on approval of Honourable High Court of Judicature of Madras and on filing requisite forms with Registrar of Companies. It was also resolved that Directors of the Company be and are hereby severally authorized in their name and behalf of the Company to do all such other acts, matters, deeds and things necessary in connection with or incidental to give such effect to the proposal of reduction for the purpose of the above resolution. The Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai, has filed an affidavit stating no objection to the proposal made by the petitioner Company for reduction of the Paid-up Equity Share Capital. In view of the above, the company petition is ordered with confirming the reduction of the paid-up equity share capital of the petitioner Company duly approved in terms of the Special Resolution passed by the equity shareholders at the Extra Ordinary General Meeting held at Chennai on 15th December, 2014,also not requiring the petitioner Company to add the words and reduced to its name as the last words thereof. - Application for confirming the reduction of Equity Share Capital approved.

Summary

Issues involved:
Confirmation of reduction of Equity Share Capital under Sections 100 to 104 of the Companies Act, 1956.

Analysis:
The petitioner Company sought confirmation for the reduction of its Equity Share Capital, duly approved by equity shareholders at an Extra-ordinary General Meeting. The Company aimed to write off losses from previous years amounting to Rs. 17,45,00,000, not represented by available assets. The proposal was in accordance with Section 100 of the Companies Act, 1956, and Article 7(b) of the Company's Articles of Association. The Company planned to reduce its Paid-up Equity Share Capital by Rs. 1,74,50,000 shares of Rs. 10 each, with adequate reserves to meet the reduction proposal. The necessary resolutions, balance sheets, and consents were submitted as evidence. The Special Resolution passed by the Company detailed the reduction process and the roles of directors in compliance with legal requirements.

The Company published advertisements in English and Tamil dailies, notifying the reduction proposal. The Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai, expressed no objection to the reduction. The Court, after considering the submissions, confirmed the reduction of the paid-up equity share capital, approved the proposed Minute, and waived the requirement for the Company to add "and reduced" to its name. The Court directed the delivery of the order and approved minutes to the Registrar of Companies for registration and mandated publication in English and Tamil dailies.

In conclusion, the Court's judgment confirmed the reduction of Equity Share Capital as per the Company's proposal and legal requirements, ensuring compliance with the Companies Act, 1956. The detailed process followed by the Company, including resolutions, balance sheets, and consents, supported the Court's decision to approve the reduction and waive additional naming requirements. The publication of the order and approved minutes in newspapers aimed to inform stakeholders about the Company's capital reduction.