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2021 (10) TMI 716 - Tri - Companies LawReduction of share capital - section 66 of the Companies Act, 2013 - HELD THAT - The Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi, after receiving the report from the Registrar of Companies, has filed his report dated 12.03.2021. On perusal of the representation, the Regional Director has no objection to the extent of proposed scheme of reduction in share capital of the Applicant company - Notice was duly served on the Income Tax Department; despite several opportunities no one has appeared for the Income Tax Department. This tribunal vide order dated 26.07.2021 directed the applicant company to file an affidavit denoting that they are tax compliant and if any demand is raised by the Income Tax Department, with regard to any dues or arrears of Income Tax, the applicant company will make good the same as per law. That the reduction of the Equity share capital of the above company, as resolved by the resolution passed at the Extra Ordinary General meeting held on the 24.08.2020, is allowed - Application allowed.
Issues:
Reduction of share capital under section 66 of the Companies Act, 2013. Analysis: The Applicant, a company engaged in the business of manufacturing wheels and related machinery spare parts, filed an application for the reduction of its share capital under section 66 of the Companies Act, 2013. The reason cited for the reduction was the accumulated carry forward losses and the need to reflect assets and liabilities at their real value. The Board of Directors approved the reduction, and the shareholders passed a resolution for the reduction at an Extra-Ordinary General Meeting. The proposed reduction involved reducing the Paid-Up Share Capital from a certain amount to a specified sum by setting off accumulated losses. The company also detailed the accounting treatment to be followed in line with applicable Accounting Standards. The Applicant provided evidence that as of a certain date, it had no secured or unsecured creditors but had loans from directors. A Certificate from the statutory auditors confirmed the absence of creditors, leading to a request to dispense with the requirement of giving notice to creditors or publishing a notice under the relevant rules. The company's Articles of Association allowed for the reduction of share capital by way of a special resolution, aligning with the process followed in this case. Financial statements for the past three years were submitted, with no adverse remarks by the auditor during those years. A Certificate from the statutory auditor attesting to the compliance of the reduction of capital with accounting standards specified under the Companies Act, 2013, was also provided. The Regional Director, Ministry of Corporate Affairs, had no objections to the proposed reduction after reviewing the Registrar of Companies' report. Despite serving notice to the Income Tax Department and no appearance from their side, the Tribunal directed the Applicant to file an affidavit confirming tax compliance. With no objections from any quarters and considering the compliance and approvals in place, the Tribunal allowed the reduction of the company's share capital as per the resolution passed at the General Meeting. The requirement to notify creditors was dispensed with, and the form of minutes under the Companies Act, 2013 was approved. The order mandated the delivery of a certified copy to the Registrar of Companies and paper publication confirming the reduction within a specified timeframe. In conclusion, the application for the reduction of share capital was allowed and disposed of in accordance with the directions provided by the Tribunal.
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