2022 (11) TMI 349 - Tri - Companies Law

Seeking approval of scheme of Capital Reduction - Section 66 of the Companies Act, 2013 - HELD THAT - The Certificate issued by the Statutory Auditor confirming that the Applicant Company has no default in arrears of repaying deposits has been annexed at Annexure 8 to the Application. The affidavit of the Managing Director and the Director of the company verifying that there are NIL Secured and NIL unsecured creditors in the company is placed as Annexure-6 of the Application typeset. In consonance with the provisions of this Act as well as the rules framed thereunder, the Applicant Company amongst other documents, have also filed a certificate dated 28.07.2022 from the Statutory Auditor issued to the effect that the accounting treatment for the Reduction of Share Capital is in conformity with the Accounting Standards with respect to the same as specified by the Central Government read with Section 133 of the Companies Act, 2013. The Applicant Company is directed to give notice of the instant Application within a period of 7 days from the date of receipt of this order to the (i) Central Government, (ii) the Registrar of Companies having jurisdiction over the files of the Applicant Company (iii) SEBI and any other relevant sectoral regulators - Application allowed.

Summary

Issues:
1. Application for scheme of Capital Reduction under Section 66 of the Companies Act, 2013.

Analysis:
The Applicant filed an Application seeking approval for a scheme of Capital Reduction under Section 66 of the Companies Act, 2013. The reliefs sought included the reduction of paid-up share capital by 68%, from Rs. 10 to Rs. 3.20 per share, consolidation of shares, and writing off accumulated losses. The Applicant passed special resolutions and obtained necessary approvals for the reduction. The Statutory Auditors confirmed the proposed accounting treatment's conformity with the prescribed standards.

The Applicant Company's share capital structure was detailed, including authorized, issued, subscribed, and paid-up capital. The Company had no partly paid-up shares or other classes of shares. The Statutory Auditors certified the absence of secured creditors, debentures, and unsecured creditors as of a specified date. The Company's Articles of Association empowered reduction of shares through a special resolution.

The Director of the Applicant Company declared no arrears in deposit repayments, supported by the Statutory Auditor's certificate. The Company's Managing Director and Director affirmed the absence of secured and unsecured creditors. The Applicant Company complied with the Act and rules by submitting relevant documents, including a certificate from the Statutory Auditor on the accounting treatment for share capital reduction.

The Tribunal directed the Applicant to notify relevant authorities, publish notices in specified newspapers, and upload information on its website regarding the Application. The Applicant was instructed to file an affidavit confirming notice dispatch and publication within a specified timeframe. Authorities receiving notices were granted three months to raise objections. The Application was scheduled for a hearing on a specified date for further orders.