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2020 (9) TMI 55 - Tri - Companies LawApproval of Consolidation of shares - Consolidation of equity shares by increasing the face value of the equity shares from the existing ₹ 10 per equity share of the petitioner to ₹ 5,000 per equity share and resultant increase in the paid-up equity share capital of the company - HELD THAT:- The petitioner-company has duly followed the process of law and passed the resolution of the consolidation of shares. Section 61(1)(b) further enables consolidation of company to alter its share capital by consolidation and divide all or any of its share capital into shares of larger amounts than its existing shares. Thus, consolidation can be approved in terms of section 61(1)(b) of the Companies Act, 2013. The objections raised by two shareholders who have failed to attend the extraordinary general meeting despite receipt of notice have not been able to make tenable grounds to oppose such consolidation, which is proposed and resolved by the members in the extraordinary general meeting dated July 18, 2017 in the best interest of the shareholders and in view of the valuation of the shares carried out by the valuer appointed by the petitioner-company. The objector has questioned the valuation report with reference to the fair market value and the offer of ₹ 3,400 to the non-promoter share value being offered by the petitioner-company. Such objections cannot be considered as the petitioner-company is not a listed company and as such the shares are not marketable and that the shareholders themselves registered the grievance that they are not able to find buyers and hence the petitioner-company would justify such shareholders who are unable to find buyers by consolidation of share. In the light of the corporate structure of the petitioner-company wherein the promoters hold 90 per cent. of the equity shares, some shareholders are not able to find buyers for their shares and hence, consolidation will be the best exit option available to the shareholders more particularly to the small shareholders. Each consolidated share will rank pari passu in all respect of each other, with no impact on effective dividend yield of the company shares and therefore, it can be said that the shareholders will have the more liquidity in their hands and reasonable return on their investment - the prayer of the petitioner-company to consolidate equity shares by increasing the face value of the equity shares from the existing ₹ 10 per equity share of the petitioner-company to ₹ 5,000 per equity share is approved as provided under section 61(1)(b) of the Companies Act, 2013. Resultantly, the paid-up share capital of the company will be increased from ₹ 44,29,480 to ₹ 44,30,000 and consequential changes in the equity share capital in the records of the company and that of the Ministry of Corporate Affairs can be made. Petition disposed off.
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