2021 (1) TMI 517 - Tri - Companies Law

Reduction of Share Capital - section 66 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 - HELD THAT - The petitioner-company is directed to publish the notices about registration of order and minutes of reduction by the concerned Registrar of Companies, Ahmedabad, Gujarat in two newspapers, namely, i. e., Business Standard in English language and translation thereof in Sandesh in Gujarati language both having circulation in the State of Gujarat within 30 days of registration. The petition for the reduction of share capital of the company is allowed subject to the directions given hereinabove. All concerned regulatory authorities to act on production of certified copy of this order to be issued on demand by the Deputy Registrar/Assistant Registrar, National Company Law Tribunal, Ahmedabad Bench.

Issues:
1. Application for confirmation of reduction of share capital under section 66 of the Companies Act, 2013.
2. Compliance with company's articles of association for share capital reduction.
3. Special resolution for reduction of share capital.
4. Compliance with statutory authorities and absence of objections.
5. Reorganization of share capital and issuance of new equity shares.
6. Approval and resolution passed at the extraordinary general meeting.
7. Registrar of Companies' report and compliance with FEMA and RBI Guidelines.
8. Compliance with FEMA and RBI Guidelines for reduction of share capital.
9. Observations and directions from the Regional Director.
10. Compliance with section 61 of the Companies Act, 2013 and filing requirements.
11. Payment of legal fees to the Central Government.
12. Compliance with publication and notice requirements post-order.

Detailed Analysis:

1. The application filed by the petitioner-company sought confirmation of the reduction of share capital under section 66 of the Companies Act, 2013, along with compliance with the National Company Law Tribunal rules for reduction of share capital.

2. The petitioner relied on Article 38 of its articles of association, which authorized the company to reduce its share capital by special resolution, as required by law.

3. The special resolution passed by the company aimed to reduce the issued, subscribed, and paid-up share capital from INR 20,00,00,000 to INR 14,00,00,000 by returning the excess capital to shareholders.

4. The petitioner-company ensured compliance with statutory authorities and confirmed the absence of objections or opposition to the reduction of share capital.

5. The reorganization of share capital involved issuing new fully paid-up equity shares and adjusting the paid-up value per share, as approved by the shareholders at the extraordinary general meeting.

6. The extraordinary general meeting unanimously passed a special resolution for the reduction of share capital, with all shareholders present and in agreement.

7. The Registrar of Companies' report highlighted the absence of pending inspections, investigations, or complaints against the company, along with directions for compliance with FEMA and RBI Guidelines.

8. Compliance with FEMA and RBI Guidelines was emphasized for the reduction of share capital, especially concerning non-resident shareholders and the repatriation of excess capital.

9. Observations and directions from the Regional Director focused on compliance with section 61 of the Companies Act, 2013, and ensuring adherence to FEMA and RBI Guidelines.

10. Compliance with filing requirements and directives from the Regional Director were addressed by the petitioner-company through its practicing chartered accountant.

11. Payment of legal fees to the Central Government was directed by the National Company Law Tribunal, ensuring appropriate compensation for representation and services provided.

12. Post-order compliance involved publication of notices and filing certified copies with the Registrar of Companies within the specified timeframe, as directed by the Tribunal.

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