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TMI Blog2019 (5) TMI 1894X X X X Extracts X X X X X X X X Extracts X X X X ..... business. It is hereby approved and confirmed the reduction of capital as approved by the Board of Directors of the Company in their meeting held on November 13, 2017 as set out in paragraph No. 8 of Company petition - Petition disposed off. - C.P.No. 482/BB/2018 - - - Dated:- 9-5-2019 - HON'BLE SHRI RAJESWARA RAO VITTANALA, MEMBER (JUDICIAL) For the Petitioner : Shri A Murali with Andre Peter For the Respondent : None ORDER Per:Rajeswara Rao Vittanala, Member (Judicial) 1) CP.No.482/BB/2018 is filed by M/s. Yokogawa India Limited (Petitioner), Under Sections 66 and 52 of the Companies Act, 2013, R/ w Rule 2(1) and Rule 3 of the NCLT (Procedure for Reduction of Share Capital of Company) Rules, 2016, by inter alia seeking to that the reduction of capital resolved by the special resolution set out in paragraph No.8; that to this end all directions necessary and proper be made and given; the proposed minute set out in paragraph 11 of this application be approved etc. 2) Brief facts of the case, as mentioned in the Petition, which are relevant to the issue in question, are as follows: (1) M/ s.Yokogawa India Limited (herein after referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation against the Company under the Companies Act, 2013 or Companies Act, 1956. (7) Reasons for Capital Reduction: The Company is an unlisted public limited Company. It delisted its shares from the National Stock Exchange of India Limited, Mumbai Stock Exchange and Bangalore Stock Exchange in 2007, under the Securities and Exchange Board of India (Delisting of Equity Shares) Guidelines 2003. Post delisting, the shareholding of non-promoter group of shareholders (herein after referred to as the Public the Company, who are 1923 (as on 26 October 2018) in number, reduced from 16.81% to 2.79%. (8) The Company received various requests from public shareholders to provide them with an opportunity to dispose of their shareholding in the Company and liquidity to the shares held in the Company. Accordingly, the Board of Directors have decided to provide liquidity to the Public shareholders by a selective reduction in the share capital of the Company. (9) The Board of Directors of the Company had approved the proposed reduction of capital at the meeting held on November 13, 2017. The Board of Directors of the Company sent a notice along with the explanatory statement in due compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FURTHER THAT for giving effect to this resolution by representing the Company, any of its Directors or the Company Secretary of the Company be and are hereby severally authorised to: a) Sign and submit requisite application, petitions, affidavits, representations or other documents as may be required for seeking sanction/ approval for the Reduction of Share Capital, from the Tribunal and/or other regulatory or statutory authorities as may be required; b) Declare and file all pleadings, reports and circulate notices including public advertisement; c) Obtain, seek and/ or submit necessary deeds/ documents/papers/ approvals/ clarification with statutory authorities including but not limited to Regional Director, Registrar of Companies and other authorities under Ministry of Corporate Affairs for the cancellation and hence reduction of the share Capital of the Company; d) Seek or obtain approval from the creditors, lenders, shareholders and/or stakeholders of the Company on any matter concerned with the cancellation and hence reduction of the Share Capital of the Company; e) Settle any question arising out of the implementation of this resolution of the cancellation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of equity share capital and securities premium does not result in a) extinguishment or reduction in the liability on any of its shares in respect of the share capital not paid up; or b) cancellation of any paid-up share capital which is lost or is unrepresented by available assets. It results in cancellation of fully paid-up shares and the respective securities premium of the Public Shareholders and securities premium in the Company and payout of consideration to the Public Shareholders in term of the special resolution approved at the Extra Ordinary General meeting.lt will not cause any prejudice to the creditors of the Company and does not involve extinction or reduction of any liability in respect of unpaid share capital, since the equity share capital of the Company is fully paid up. ii. It is further stated that there is no reduction in the amount payable to any of the creditors, no compromise or arrangement is contemplated with the creditors and also as there is no significant reduction in the security, which the creditors may have in the Company. In any case, the asset cover ratio covenanted by the Company, if any, would continue to be maintained even after the propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia declared the Company's proposal of reduction of share capital is in accordance with the standards specified in Section 133 of the Companies Act, 2013 and it is confirmed that the Company has no arrears in repayment of deposits or interest thereon. (4) The Petitioner Company has not submitted any valuation report so as to ascertain the basis on which the valuation of shares and premium to outgoing shareholders has been arrived. (5) Further, the Company proposed to return the capital to the outgoing members out of securities premium account. As per Section 52(2) and (3) of the Companies Act, 2013, the Securities premium account can be used for only for the purpose stated therein and not for otherwise. In this case, the Company is not proposing to compensate/ reward the benefit of the company to its shareholders by way of announcing buy back of shares. That alternately the Company can go for buy back of securities by complying with Section 68 of the Companies Act, 2013, if the intention of the Petitioner is to do away with the non-promoter/ public shareholders. (6) The Applicant Company has not raised any deposits from public as per the applicable provisions of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the scrutinizers appointed for the EGM is detailed as below (including the break-up of voting between promoter and public shareholders, e-voting and members present at the EGM): Sl. No. Shareholder (in numbers) For (0/0) Against (%) Total (0/0) Remote E-votin 1. Promoter Group - - - 2. Non-Promoter Public Shareholder 80% 20% 100% Voting by Poll 1. Promoter Group 100% - 100% 2. Non-promoter public shareholders 83.33% 16.67% 100% In total including the promoter shareholders approx. 99.99% (representing 85,05,739 equity shares) of shareholder have voted in favor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on immovable properties and book debt. However no meeting of the secured creditors held could be seen in the Petition . Section 66(2) of Companies Act, 2013 read with Rule 3 of NCLT (Procedure for Reduction of Share Capital of a Company) Rules, 2016, and the directions by the Hon'ble NCLT by which the Company shall give notice to creditors in Form RSC-3 seeking for representations/ objections if any, for the said Reduction of the Share Capital of the company, from both the secured and the unsecured creditors. The creditors as stated under the provisions of the Companies Act, 2013 the rules thereon, shall make representation/ objections within the period of three (3) months from the date of the circulation of the individual notices as well as the notice by newspaper circulation. It may be noted that the Company is not in receipt of any kind of representation or objection from the creditors including the creditors secured vide the charge created against the assets of the Company. The Company has obliged to follow the provisions of the Companies Act, 2013 and the rules thereon and the directions by the Hon'ble NCLT in notifying the creditors. The Company has filed necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding the exit opportunity to the shareholders. Further, the reduction of capital is a complete transparency process in as much as the approval of the shareholders (by special resolution) will be obtained, creditors will be notified on the process for their view and besides eliciting the views of the Regional Director. The entire process is subject to the supervision of the Tribunal. 5) The learned Counsel for Petitioner has filed written submissions dated 25.03.2019, to the observations of the Registrar of Companies, Karnataka dated 18.03.2019, by inter alia stating are as follows:- (1) It is stated in the case of the shareholders of the unlisted Companies, under the Companies Act, 2013, the Companies may provide for the options to the shareholders to exit either by Reduction of share Capital under the provisions of section 66 of the act or by (ii) Power of Company to purchase its securities under the provisions of section 68 of the act subject to the approval by the appropriate authorities. In the absence of the specific provisions under the Companies Act, 2013 and the rules thereon to follow mandatorily to choose one option over the other, the Company (i.e. the Board of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLT Bengaluru Bench. Kothari Safe Deposits Limited CP/181/CAA/2017, NCLT, Chennai Bench. Intertnet Global Services Private Limited (CP. No. 227 of 2017, NCLT, Mumbai Bench ACG Arts and Properties Private Limited (CP 240/66/NCLT/MB/MA11/2017). NCIT, Mumbai Bench. Hodek Vibration Technologies Private Limited (CP.No.91 of 2016), NCLT, Mumbai Bench. Varroc Engineering Private Limited (CP. No. 143 of 2017), NCLT, Mumbai Bench. VM Salgoacar Corporation Private Limited (CP. 288/66 NCLT/MB/MAH/2017), NCLT, Mumbai Bench. V.M. Salgaocar Brothers Private Limited NCLT Mumbai Bench. 6) Heard Shri Murali. A, learned Counsel for Petitioner. I have carefully perused the pleadings of both the parties and extant provisions of the Company Act, 2013 and the rules made there under. 7) The case was admitted 09.11.2018 by permitting the Petitioner to cause newspaper publication in The Hindu English daily and Kannada Prabha Kannada daily Newspapers, Bangalore Edition, and also ordered notice to ROC and RD. In pursuant to the above order, a notice in Form No.RSC-2 was issued on 22.11.2018 to the Regional Director (SER) and Registrar of Companies by enclosing copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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