2021 (6) TMI 194 - Tri - Insolvency and Bankruptcy

Reduction of share capital - arrears of repayment of deposits or any interest thereon is there or not - section 66 of Companies Act, 2013 - HELD THAT - Since there is neither Secured Creditor nor Unsecured Creditor of the Applicant Company. However, the Applicant Company is directed to make publication on or before 20.05.2021 in the newspapers one in English i.e. Business Standard (All India edition) and one in Vernacular i.e. Malai Malar (Tamilnadu edition) having wide circulation specifically containing the proposed reduction of share capital of the Company. A notice copy shall also be uploaded on the website of the Company indicating the details containing the proposed reduction of share capital of the Company. The Applicant Company is directed to file the proof of newspaper publication by way of an affidavit. The Registry is directed to place the matter before this Bench within 15 days after expiry of the 90 days period of notice.

Issues:
1. Application for reduction of share capital under Section 66 of the Companies Act, 2013.
2. Approval of reduction by the Board of Directors and Extra-Ordinary General Meeting.
3. Members' resolution for reduction of share capital.
4. Examination of the scheme by the Statutory Auditor.
5. Publication requirements for reduction of share capital.
6. Notice to Regional Director, MCA, and Registrar of Companies for objections.

Analysis:
1. The judgment deals with an application under Section 66 of the Companies Act, 2013 for the reduction of share capital by a Private Limited Company. The Applicant Company sought confirmation to reduce its Issued, Subscribed, and Paid-up share capital, including preference shares, through a selective reduction process. The proposed reduction was approved by the Board of Directors and in an Extra-Ordinary General Meeting, with a special resolution passed for the purpose.

2. The Applicant Company, incorporated under the Companies Act, 2013, had all its equity shares held by five members who voted in favor of the special resolution for the reduction of share capital. The company had no secured or unsecured creditors, as confirmed by a certificate from a Chartered Accountant. The application also included an Auditor's certificate supporting the proposed reduction.

3. The Applicant Company's counsel requested dispensation from issuing notices to unsecured creditors and publication requirements as per the Companies Act, 2013 and NCLT rules. The Articles of Association of the company allowed for capital reduction by special resolution, as permitted by law. Declarations from the Board of Directors and the Auditor confirmed no arrears of deposits or interest, with no existing deposits in the company.

4. The Statutory Auditor examined the proposed reduction scheme and certified its compliance with the Accounting Standards specified under the Companies Act, 2013. Considering the absence of secured or unsecured creditors, the Tribunal directed the Applicant Company to publish notices in newspapers and on its website, with a deadline for objections.

5. The judgment mandated the publication of notices in newspapers with wide circulation and on the company's website, along with notices to the Regional Director, MCA, and the Registrar of Companies for objections. Interested parties were given three months to raise objections, after which the matter would be reviewed by the Tribunal.

6. The Registry was instructed to present the case before the Tribunal after the 90-day objection period to finalize the decision on the proposed reduction of share capital. The judgment ensured compliance with legal procedures and transparency in the reduction process, safeguarding the interests of stakeholders and regulatory authorities.

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