2020 (9) TMI 850 - Tri - Companies Law

Reduction of Share Capital - HELD THAT - The Petitioner Company has complied with the requirements as per the directions of the Tribunal vide Order pronounced on 3rd August, 2020. In pursuance of the said Order, a Brand Valuation Report for the Petitioner Company along with a Covering Affidavit, annexed with a Legal Submission was filed with the Tribunal on 14th August, 2020. A copy of the same was furnished to the Regional Director on the 14th August, 2020 - the Petitioner Company further submits that the Petitioner Company has complied with all statutory requirements as per the directions of the Tribunal. Moreover, the Petitioner Company also undertakes to comply with statutory requirements, if any under the Companies Act, 2013 and the Rules made thereunder, as may be applicable. Since the requisite statutory procedure has been fulfilled, the Company Petition is made absolute in terms of the prayer clause of the Petition. All concerned regulatory authorities to act on certified copy of the order and the form of minutes forming part of the Petition, duly certified by the Deputy/Assistant Registrar of this Tribunal. The Petitioner Company undertakes to file the same with the Registrar of Companies within thirty days from the date of the receipt of the order.

Issues:
1. Reduction of equity share capital by a company.
2. Compliance with statutory requirements under the Companies Act, 2013.
3. Approval of reduction of capital by shareholders.
4. Observations and recommendations by the Regional Director.
5. Undertakings by the Petitioner Company to meet financial obligations.
6. Filing of necessary documents with regulatory authorities.
7. Publication of notices regarding the reduction of capital.

Reduction of Equity Share Capital:
The Petitioner Company sought to reduce its equity share capital from ?14,38,30,600 to ?10,41,600 by cancelling 1,42,78,900 fully paid-up equity shares held by a Promoter Shareholder. This reduction was proposed to offset accumulated business losses amounting to ?42,12,27,550. The shareholders approved this reduction through a Special Resolution passed on 30th September, 2019.

Compliance with Statutory Requirements:
The Petitioner Company, represented by its Authorized Representative, assured compliance with all statutory requirements under the Companies Act, 2013, and undertook to fulfill any additional obligations that may arise. The Company also submitted a Brand Valuation Report and other necessary documents as directed by the Tribunal.

Approval and Undertakings:
The Regional Director raised concerns regarding the company's financial resources to meet the proposed payout and requested an affidavit ensuring the protection of creditors' interests and statutory dues. The Petitioner Company responded by providing bank statements demonstrating adequate funds for the payout and giving undertakings to meet all financial obligations and comply with tax laws.

Filing and Publication Requirements:
The Petitioner Company was directed to file certified copies of the order and minutes with the Registrar of Companies within thirty days. Additionally, the company was instructed to publish notices of the reduction in two newspapers circulating in Mumbai to inform the public about the change in equity share capital and accumulated losses.

Conclusion:
Having fulfilled all statutory procedures and requirements, the Company Petition was granted, and the reduction of equity share capital was approved. The Petitioner Company was instructed to take necessary actions to implement the reduction, including filing documents with regulatory authorities and publishing notices as per the directions provided.

This detailed analysis covers the issues of equity share capital reduction, compliance with statutory regulations, approval processes, responses to observations by the Regional Director, undertakings by the Petitioner Company, filing requirements, and publication obligations.

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