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2018 (6) TMI 951 - AT - Companies LawContravention of FEMA Regulations - excess shares allotted - Securities premium amount has been determined wrongly short and consequently paid up capital have been allocated of more amount than required - Held that:- This case deals where the CCDs have been converted into shares at a wrong share premium. The money has already been received by the company and the allocation of the same between paid up share capital and securities premium has to be done. It is noted that security premium account for all practical purposes is to be treated as if security premium account were the paid up share capital of the company as per Section 52 of the Companies Act, 1956. Securities premium amount has been determined wrongly short and consequently paid up capital have been allocated of more amount than required. Therefore, change in composition between the security premium account and paid up share capital will not amount to reduction in capital as both the components are treated as paid up capital. Further a reading of Section 100 of the Companies Act, 1956 shows that this case is not covered under any of sub-clauses (a), (b) and (c) of Clause (1). As the appellant has opted to unwind the excess shares allotted, therefore, this will make a case of rectification of wrongful calculation of share capital and securities premium and not reduction of share capital because the security premium account is also to be treated as paid up share capital. This is a case where security premium amount will be increased and equal amount of paid up capital will be decreased and there will be no change in the overall amount allocated to paid up share capital and security premium account. The appellant shall take steps and cancel the excess shares 219658 allotted to 1st respondent and the total amount received for issuing CCDs will be utilised for issuing 209761 shares of ₹ 10/- each at a premium of ₹ 54.22 as on 6.8.2013. The amount of premium will be transferred to security premium account in the books of accounts. The balance sheets filed after 6.8.2013 will be refiled duly certified by a chartered accountant. For this process the company will comply with all other legal formalities as per law and Companies Act, 2013. This order will not come in the way of RBI for taking any action for contravention of FEMA Regulations against the appellant company.
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