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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 ..... the Companies Act, 1956, as a Company limited by shares, in name and style of Yokogawa Keonics Limited. The name of the Company was changed to Yokogawa Blue Star Limited on November 16, 1992 and thereafter, on April 16, 2004, the name of the Company was changed yet again to Yokogawa India Limited. (2) The Authorised Capital of the Company as on March 31, 2018 is Rs. 10,00,00,000 divided into 1,00,00,000 equity shares of Rs. 10 (Rupees Ten). The issued, subscribed and fully paid up capital of the Company as on March 31, 2018 was Rs. 8,75,00,000 (Rupees Eight Crore, Seventy Five Lakhs) divided into Rs. 8,75,00,000 equity shares of Rs. 10 (Rupees Ten) each, wherein Promoter Group holding is 97.21%. (3) The main objects of the Company, in brief, are to assemble, manufacture, design, develop, engineer, service, buy, sell, import, export and otherwise to deal in Industrial Process Control Instruments, Instrumentation and Systems, Test and Measuring Instruments and to undertake turn-key jobs or divisible or indivisible works contracts in which the parts LCD accessories, components, products, systems and instruments are to be employed together which the deployment or employment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Companies Act, 2013. If any, the Rules prescribed thereafter, provisions of the Memorandum ("MOA") and Articles of Association ("AOA") (Article 41 & 42) of the Company, and subject to sanction by the NCLT, Bengaluru Bench ("Tribunal"), consent of the members be is and hereby accorded for the cancellation and reduction of the issued, subscribed and paid up equity share capital consisting of 244,531 (Two Lakh Forty four thousand five hundred and thirty one) equity shares of Rs. 10 (Rupees Ten) each fully paid up along with the securities premium/free reserves held by shareholders belonging to the non-promoter group of the Company, by returning the paid-up equity share capital along with proportionate amount of the securities premium lying to the credit of the securities premium amount and free reserves to each of the shares held by the respective shareholders at Rs. 10 (Rupees Ten) per paid up equity share capital along with the premium amount of Rs. 913.20 (Rupees Nine Hundred and Thirteen and paise twenty) in cash (hereinafter referred to as "public shareholders"); RESOLVED further that subject to the confirmation as aforesaid and by the Tribunal/ other appropriate au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val of the Company in this regard. RESOLVED FURTHER THAT any Director or the Company Secretary of the Company be and are authorised severally to circulate the certified true copy of this resolution to all such authorities as may be necessary" (10) The details about the number of members present and voted in Extraordinary General Meeting of the Company in relation to the approval of reduction of equity share capital of the Company is summarized below: (i) The number of members present (including proxy) and voting at such meeting and number of shares or voting power held by them 33 (ii) The number of members (including proxy) who voted in favor of the resolution for reduction of equity share capital and the number of shares or voting power held b them 28 (iii) Number of votes casted in favor of the resolution 85,06,955 (iv) Percentage of votes casted in favor of the resolution 99.99% (v) The number of members who voted against the resolution and the number of shares or voting power held by them 5 (vi) Number of votes casted against the resolution 503 (vii) Percentage of votes casted against the resolution 0.01% (11) The Petitioner Company has since du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the Companies Act, 2013, to the Special resolution of Yokogawa India Limited passed on 11 th January, 2018 at the Extra Ordinary General Meeting approving the reduction in the paid up equity share capital from the Company be reduced from Rs. 8,75,00,000 divided into Rs. 8,50,54,690 equity share of Rs. 10 each to Rs. 8,50,54,690 divided into 85,05,469 shares of Rs. 10 each. 3) The Registrar of Companies, Karnataka, has filed a report dated 19.02.2019, by inter alia contending as follows: (1) The Company is an unlisted public limited Company. It had 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 in the Company, who are 1923 in number, reduced from 16.81% to 2.79%. The public shareholders requested the Company for avenue in disposing of their shareholding in the Company and liquidity to the shares held in the Company. (2) The Shareholders approved the proposal of reduction vide extra ordinary general meeting held on 19.02.2018. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uture earning is taken care therein". It is submitted that, the Company has obtained a report on the valuation of the equity shares of the Company from an independent valuer "M/S. Grant Thornton India LLP", where the value of the Company is determined by considering the future earning (including the enhancement to the business on account of goodwill) of the Company. The Board of Directors of the Company during the 147th Board Meeting held on November 13, 2017 resolved that the value of per equity shares as reported by the independent valuer is Rs. 923.20/- inclusive of Rs. 10/- towards the face value per share and Rs. 913.20/- towards the premium per equity share. (2) With respect to the observation made by the Regional Director "(ii) The Company be directed to place on record as to how many of the non-promoter shareholders have supported and opposed the scheme and what is the proportion of them in the total shareholders. Also the Company has not convened meeting of unsecured creditors". It is submitted that the Company has convened an Extra Ordinary General Meeting ("EGM") of equity shareholders on January 11, 2018, by issuing notice (along with explanatory statement) as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice with a coy served on the Company." The Company has served notice on each creditor individually vide Form RSC-3 and vide newspaper circulation. Also, it may be noted that Company is not in receipt of representation or objections from the creditors during the period of three (3) months from the date of circulation of individual notices as well as the notice by newspaper circulation. In the absence of provisional requirement under the Companies Act, 2013 read with related rules, the Company has not initiated to convene a meeting of the creditors which is not within the frame work prescribed by the law. The Company has already submitted affidavit as stated under Rule 5 of NCLT (Procedure for Reduction of Share Capital of a Company) Rules, 2016, vide form RSC-5 confirming the dispatch and publication of the notice with this Hon'ble NCLT Bench on November 29, 2018. (5) With respect to the observation made by the Registrar of Companies, Karnataka, that "(iii) The Company has open charges 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 (Procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the Company can go for buyback 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. Since the Company received requests from the public shareholders time and again to provide an opportunity to exit and liquidity to the respective holdings in any way legally framed, the Company is entitled to take appropriate option as per the circumstances. (8) In the present case, the option of the reduction of the share capital was considered and approved by the Board of Directors (during the 147th meeting held on 13th November 2017) and then by the shareholders (during an Extra Ordinary General Meeting held on 11th January 2018), wherein it was decided for the repayment of the excess capital through the reduction of capital method which is envisaged in Section 66 of the Companies Act, 2013. The Company accordingly choose the reduction of the capital as a preferred method for providing 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Therefore, the learned Senior Counsel has asserted that it is a well settled position of law that a Company has freedom to choose the procedure laid down in the law. As stated supra, all the stake holders have accepted the reduction in question and all the extant provisions of law are duly followed. (4) The learned Counsel has relied upon the following judgments in support of his case: Miheer H Mafatlal vs. Mafatlal Industries Ltd (SC) (1996) 23 CLA 1 (SC)/(1996) 10 SCL 70 (SC) Zee Interactive Multimedia Ltd. In re (Bombay) (2002) 39 SCL 534 / 111 compcase 733 (Bombay) Lanco Kalahasthi Castings Ltd. In re (2004) 52 SCL 131/ 124 comp case 523 (Andhra Pradesh) Hindalco Industries Ltd. In re (2009) 94 SCL 1/151 Comp case 446 (Bombay). Alstom Power Boilers Ltd (Bombay) 12003) 43 SCL 449 (Bombay) Practo Technotogies Private Limited (T.P. No.240/2017), NCLT Bengaluru Bench ABB Global Industries and Services Private Limited (T.P. No.244/2017), 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 B ..... 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