TMI Blog2020 (11) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... does not involve the diminution of any liability in respect of unpaid share capital. No prejudice is caused to any of the creditors or other stakeholders with the proposed reduction as there is no reduction in the amounts payable to them, no compromise or arrangement is contemplated with the creditors and there is no reduction in the security, if any. The company also has sufficient funds even after the reduction, and hence neither its business operations would be adversely affected, nor its ability to honour its commitments or to pay its debts in the ordinary course of its business. Hence it appears that the impugned action will not cause prejudice to any of the stakeholders, if the reduction of capital is approved. On a perusal of the material brought on record, it appears that the applicant fulfils the conditions laid down in section 66 of the Companies Act, 2013 and the proposed reduction is conformity with the accounting standards specified in section 133 of the Companies Act, 2013 - the company petition is disposed off by according approval to the proposed reduction of capital. Application allowed. - C. P. No. 43/BB/2020 - - - Dated:- 10-7-2020 - Rajeswara Rao Vitta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le preference shares of INR 10 68,690 31,294 series A1 compulsorily convertible preference shares of INR 10 each 3,12,940 3,30,000 series A2 compulsorily convertible preference shares of INR 100 each 3,30,00,000 30,443 series A3 compulsorily convertible preference shares of INR 10 each 3,04,430 3,38,36,260 (3) Balance-sheet and provisional balance-sheet as at March 31, 2019 and September 30, 2019 have been placed on record as annexures B and B1 respectively. It is stated that there is no audit qualification, reservation or adverse remark or disclaimer made by the auditor in his report. Also, there are no pending inspection, inquiry or investigation against the company under the Companies Act, 2013. (4) It is stated that the company adapted Table F as its articles and article No. 38 of Table F is provided as follows : The company, may by special resolution, reduce in any manner and with, and subject to, any incident authorized and consent required by law,- (a) Its share capital (b) Any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company duly passed in accordance with section 66(1) read with section 114 of the Companies Act, 2013, at the extraordinary general meeting held on November 29, 2019. Pursuant to due notice as provided under the Act dated November 4, 2019 it was resolved : Resolved that pursuant to the provisions of section 66 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 and the applicable provisions of the National Company Law Tribunal Rules 2016 and subject to confirmation of the National Company Law Tribunal and any other competent authority as may be specified in this regard, the paid-up share capital of the company be and is hereby reduced from INR 3,38,36,260 (Indian rupees three crores thirty eight lakhs thirty six thousand two hundred and sixty only) to INR 2,98,50,200 (Indian rupees two crores ninety eight lakhs fifty thou sand two hundred), by cancelling the following shares, being in excess of wants/requirements of the company : Name of the shareholder Type of shares No. of shares Tracxn Labs Fund-1-Scheme of Trac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Resolved further that a sum of ₹ 53,13,949 (rupees fifty three lakhs thirteen thousand nine hundred and forty nine only) from the securities premium account be utilized for the pay-out against equity shares being cancelled, and the security premium account be and is hereby reduced from ₹ 120,458,908 (rupees twelve crores four lakhs fifty eight thousand nine hundred and eight only) to ₹ 115,144,959 (rupees eleven crores fifty one lakhs forty four thousand nine hundred and fifty nine only) subject to the approval of shareholders and creditors and confirmation by the National Company Law Tribunal. Resolved further that Mr. Kush Srivastava and Mr. Mrigank Shek har, directors of the company be and are hereby severally and/or jointly authorized to take necessary action, including convening of shareholders meetings, signing necessary application, petition or any other documents, forms, etc., to the National Company Law Tribunal, Reserve bank of India, Registrar of Companies, Regional Director or any other competent authority as may be specified in this regard and for following the directions, if any, given by the National Company Law Tribunal, Reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany or the ability of the petitioner company to honour its commitments or to pay its debts in the ordinary course of its business. Subsequent to approval of the proposed reduction of equity share capital by this Tribunal, the proposed capital structure of the company will be as follows : Authorized capital Amount INR. 2,30,000 equity shares of INR 1 each 2,30,000 3,99,500 preference shares of INR 10 each and INR 100 each 3,36,95,000 Issued, subscribed and paid-up capital Amount INR. 1,50,200 equity shares of INR 1 each fully paid up 1,50,200 3,98,606 preference shares of INR 10 each and INR 100 each fully paid up 3,36,86,060 (11) The Form of the minute proposed to be registered under section 66(5) is as follows : The paid-up share capital of Olmec Technologies P. Ltd., is henceforth INR 2,98,50,200 (Indian rupees two crores ninety eight lakhs fifty thousand two hundred only) consisting of 1,50,200 equity shares of INR 1 each fully paid-u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia, contending as follows : (1) It is observed that article 38 of table of articles of association of the petitioner-company permits reduction of share capital of the company. (2) The scheme states that the reason for reduction of capital is for repayment of excess capital which is not required for carrying on the main objects of the petitioner company. The reduction of capital does not involve diminution of any liability in respect of unpaid share capital. The proposed reduction of share capital would not adversely affect the ordinary operation of the petitioner-company or the ability of the petitioner-company to honour its commitments or the pay its debts in the ordinary course of its business. (3) The board of directors at their meeting held on November 4, 2019 considered and approved the reduction of paid-up share capital. The board resolution has been filed by the petitioner-company in Form No. MGT-14 for reduction of capital vide SRN R24581746, dated December 18, 2019. (4) It is also observed that the shareholders have approved the proposal of reduction vide extraordinary general meeting held on November 29, 2019. The relevant form for the present capital reducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl. No. No. of shareholder Type Shares Amount 1. 1,50,200 of ₹ 1 Equity shares 1,50,200 1,50,200 2. 6,869 of ₹ 10 A series CCPS 6,869 68,690 3. 31,294 of ₹ 10 A1 series CCPS 31,294 3,12,940 4. 3,30,000 of ₹ 100 A2 series CCPS 3,30,00,000 3,30,00,000 5. 30,443 of ₹ 10 A3 series CCPS 30,443 3,04,403 Total 3,38,36,260 (b) The petition seeking sanction of reduction of capital from ₹ 3,38,36,260 to ₹ 2,98,50,200. After reduction the shareholding pattern would be : Equity share of ₹ 1 each ₹ 1,50,200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RS Livemedia P. Ltd., In re (Company Petition No. 572 of 2013) [2014] 187 Comp Cas 243 (Delhi). The hon'ble High Court of Delhi confirmed that there is no requirement to first convert the CCPS into equity shares before going for reduction. The said observation is not at all tenable in law. Paragraph 22 of the said judgment clearly affirms the position of law as justified by the petitioner here. (3) Regarding paragraph No. 13 : It is stated that the company is having bank balance of ₹ 1,49,92,892 (rupees one crore forty nine lakhs ninety two thousand eight hundred and ninety two only) in its account and after payment of reduction obligation company will have a cash balance of more than 56 lakhs for its future operation. (4) Regarding paragraph No. 14 : It is stated that the company has an amount of ₹ 12,04,58,908 in its share premium account and an amount of ₹ 3,38,36,260 as its share capital including equity and preference share capital. The share premium account and share capital put together amounts to ₹ 15,42,95,168 which is the actual amount the petitioner- company possesses. The reserves and surplus after setting off the accumulated loss amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a company in respect of the share capital which is not paid-up, or on cancellation of any paid-up share capital which is lost or is unrepresented by available assets, or on payment of any paid-up share capital which is in excess of the wants of the company, subject to the conditions enumerated therein. 7. Article 7 of the articles of association filed by the petitioner (adapted from article 38 of Table F of Schedule 1 to the Companies Act, 2013) permits reduction of share capital of the company. The reduction of capital has been done pursuant to the approval of the board of directors vide their resolution dated November 4, 2019 and resolution passed at the extra- ordinary general meeting held on November 29, 2019. 8. We have perused the report of the Registrar of Companies, Karnataka, who has examined the application and made certain observations, which have been answered by the applicant vide its reply affidavit dated June 29, 2020. The same has been examined along with financial statements for the financial year ending March 31, 2019 and September 30, 2019 which appear to reflect the position stated in the replies furnished by the applicant. It appears that the reduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced from INR 3,38,36,260 (rupees three crores thirty eight lakhs thirty six thousand two hundred and sixty only) comprising 1,50,200 equity shares of INR 1 each fully paid-up, 6,869 series A compulsorily convertible preference shares of INR 10 each fully paid-up, 31,294 series A1 compulsorily convertible preference shares of INR 10 each fully paid-up ; 3,30,000 series A2 compulsorily convertible preference shares of INR 100 each fully paid-up ; and 30,443 series A3 compulsorily convertible preference shares of INR 10 each fully paid-up and further the securities premium account be and is hereby reduced from 12,04,58,908 (rupees twelve crores four lakhs fifty eight thousand nine hundred and eight only) to ₹ 11,51,44,959 (rupees eleven crore fifty one lakhs forty four thousand nine hundred and fifty nine only). (3) The company shall publish the reduction of share capital in an English daily The Hindu and a Kannada daily Udayavani newspapers, Bengaluru edition within a period of two weeks from the receipt of this order ; (4) The company is directed to deliver a certified copy of this order along with the above form of the minute to the Registrar of Companies and all the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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