Home Case Index All Cases Companies Law Companies Law + Tri Companies Law - 2020 (10) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1254 - Tri - Companies LawScheme for reduction of Share Capital - objection of the 3.59% of minority shareholders as a whole - legitimate expectation to be adequately compensated with regard to valuation of shares - rights of minority shareholders - HELD THAT:- The objectors have to be distinguished in three different groups (i) 9 Objectors have acquired the shares of the Petitioner Company after the EGM was conducted i.e. they did not hold any shares as on the date of the EGM, (ii) 11 Objectors, in aggregate holding 9,148 equity shares of the Petitioner Company as on the date of the EGM, have not attended and / or voted at the EGM, and (iii) 2 Objectors, namely, Mr. Puneet Kumar and Ms. Sangeeta Gupta, jointly holding 20,205 equity shares in the Petitioner Company, voted in favour of the Resolution approving the reduction of the share capital. Therefore the moot question arises as to the locus standi of such objectors who have acquired shares post the EGM and shareholders who voted in favor of the resolution, be that as it may, we consider the objection raised by the entire group. This bench is only concerned with the first issue of objection of the 3.59% of minority shareholders as a whole, is with regard to their legitimate expectation to be adequately compensated with regard to valuation of shares. The rights of minority shareholders qua the Valuation of shares as per the two Valuers and the Fairness report has to be examined. Method of valuation and assumptions carried out by the Valuers - HELD THAT:- The details captured in the two valuation report depict the assumptions and calculations considered by them, while concluding the share price of the petitioner company. Whether the proposed scheme has the effect of wiping out entirely a class of shareholders, namely, the non-promoter shareholders, though on payment of certain compensation in view of the objection raised by them and whether such selective reduction can be allowed? - HELD THAT:- Section 66 of the 2013 Act expressly permits companies to undertake reduction of their share capital in any manner, i.e. including by way of selective reduction of share capital, as laid down by numerous High Courts - Given the facts of the present case and that the objectors being class of Non-Promoter shareholders who have been offered to exit at a certain price as fixed by the valuation of shares and in consideration of the several decisions cited above, it is concluded that selective reduction is permissible under Sec.66 of the Companies Act. Objection raised by RD is that the report of ROC, Pune that no complaint has been received, but one M. Punit Kumar regarding Syngenta has complained that the company is paying only 43.4 % of Fair Market Price and cheating the small shareholders, therefore the company is seeking to bump of entire 12,373 Public Shareholders/11,81,036 Equity Shares consisting of 3.59% at an offer price ₹ 2,445/- Per Share - HELD THAT:- Such selective reduction of capital is not within the letter and spirit of Section 66 of the Act. This is against the public interest as the present value/status of the company is also due to public participation. The selective reduction is detrimental to the public participation in equity market. The objections are untenable in view of ratio laid down by Hon’ble Supreme Court and Hon’ble High Courts. The objection of the RD cannot be accepted on two grounds 1) that they have not considered the Valuation Report produced by the Petitioner Company 2) The dictum of several Courts where they have allowed the Selective Reduction in view of corporate governance and democratic rights of the Company to reduce its share capital by calling it an Domestic/internal decision of the company. The petitioner company has complied with the statutory compliances by sending notices to the Regional Director, Western Regional Ministry of Corporate Affairs (RD) and the Registrar of Company, Pune. No notice has been issued to SEBI as the petitioner company is not a listed company. The notice of hearing of the company petition was published in Indian Express (Pune Edition) and Lok Satta (Pune Edition) on 06.02.2018, the company does not have any deposits as certified by its auditors. The petitioner has no secured creditors and notice of the petition was served upon each of the unsecured creditors. Application for reduction of share capital is allowed subject to the directions issued.
|