2021 (1) TMI 316 - Tri - Companies Law

Reduction of Capital - seeking that requirement of issuing notice to creditors and publishing newspaper advertisement may kindly be waived - HELD THAT - The Petitioner in the petition stated that the Company is not having any foreign investments and, therefore, was not required to comply with the provisions of FEMA and RBI guidelines in respect of Foreign Direct Investment (FDI). It is also stated that the proposed reduction of share capital has no adverse impact on the employees as there are no employees working on the rolls of the Company as on 31.10.2019 and the tax implication arising out of such reduction of share is subject to the final decision of the Income Tax authorities. Since all the requisite statutory procedures have been fulfilled and no objections received from any shareholders before this Tribunal, the Company Petition is made absolute in terms of the prayer clause of the Petition, which are hereby allowed - All concerned regulatory authorities are directed to act on certified copy of the order, duly certified by the Deputy Registrar or Assistant Registrar, National Company Law Tribunal. The Petitioner Company is directed to file the order with the Registrar of Companies within 30 days from the date of the receipt of the order. All concerned regulatory authorities are directed to act on certified copy of the order, duly certified by the Deputy Registrar or Assistant Registrar, National Company Law Tribunal. The Petitioner Company is directed to file the order with the Registrar of Companies within 30 days from the date of the receipt of the order - Petition disposed off.

Summary

Issues:
Company petition under Section 66 of the Companies Act, 2013 for reduction of capital and related reliefs.

Analysis:
The Company filed a petition seeking relief for the reduction of capital, waiver of certain requirements, and approval of proposed minutes. The RoC filed a report stating no objections to the reduction of capital. The Petitioner Company cited its Articles of Association empowering it to reduce share capital in accordance with the Companies Act, 1956. The Company's business activities and the rationale behind the reduction were presented. The Board approved the reduction, and all statutory procedures were duly followed. No objections were raised, and the petition was allowed.

The Petitioner Company demonstrated compliance with statutory requirements, absence of foreign investments, and no adverse impact on employees. The reduction was deemed beneficial for shareholders and stakeholders. The order directed regulatory authorities to act on it and the Company to file it with the RoC. Publication of the order in newspapers was also mandated. The form of minutes detailing the reduction process was provided in the schedule attached to the petition. The reduction involved canceling a significant sum from the share capital and transferring shares to shareholders. The order was dated January 7, 2021, and the Company was given specific directives regarding compliance and publication.