Reduction of share capital within an amalgamation scheme confirmed after shareholder approval and no prejudice to creditors.

Reduction of share capital forming part of an amalgamation scheme was confirmed where the company's articles authorised reduction, shareholders approved it by special resolution, and the reduction involved cancellation of cross-holdings with the reduced amount credited to the general reserve. The court treated reduction of capital as a domestic corporate matter and limited its role to ensuring the proposal was fair, not inequitable, and that creditor interests were protected. As creditors were not shown to be prejudiced and the Regional Director raised no objection, no legal impediment existed to refuse confirmation. The minutes for registration were sanctioned.

---

---

Issues: Whether the proposed reduction of share capital, forming part of the scheme of amalgamation, should be confirmed and the minutes of reduction approved for registration.

Analysis: The company was authorised by its articles to reduce share capital, and the reduction had been approved by the shareholders by special resolution. The reduction formed an integral part of the scheme of amalgamation, under which cross-holdings were to be cancelled and the reduced amount credited to the general reserve account. The creditors were not shown to be prejudiced, and the Regional Director recorded no objection. Reduction of share capital is treated as a matter of domestic concern, and the court's role is to ensure that the proposal is fair and not inequitable and that creditor interests are protected. On the facts, no legal impediment or valid ground existed to refuse confirmation.

Conclusion: The proposed reduction of share capital was approved, and the minutes to be registered under section 103(1)(b) of the Companies Act, 1956 were sanctioned.

---