2015 (2) TMI 1359 - HC - Companies Law

High Court approves reduction of share capital & securities premium account under Companies Act.

The High Court of Karnataka approved the reduction of share capital and securities premium account as per the Companies Act, 1956 and 2013. Shareholders ... Seeking reduction of the share capital - HELD THAT:- There is no impediment to accept the said resolution. Consequently, the petition is allowed. The order including the minutes shall be delivered to the Registrar of Companies within twenty one days from the date of receipt of a certified copy of this order. The notice of reduction of paid-up equity share capital and securities premium account, shall be published in the English Daily ‘The Hindu’ and Kannada Daily ‘Udaya Vani’ Bangalore edition within fifteen days from the date of registration of the order and minutes by the Registrar of Companies and a copy thereof shall be filed by the petitioner with the Registry. Issues:1. Reduction of share capital petition filed.2. Approval sought for reduction of share capital and securities premium account.3. Compliance with Companies Act, 1956 and 2013 for reduction of share capital.4. Resolution passed by shareholders for reduction of share capital and securities premium account.5. Acceptance of the resolution and approval by the High Court of Karnataka.6. Directions for publication and filing of order with the Registrar of Companies.Analysis:1. The petition was filed seeking a reduction of the share capital as per the provisions of the Companies Act, 1956 and 2013. The creditors' list was settled, and publications were made in 'The Hindu' English Daily and 'Udaya Vani' Kannada Daily. An Extraordinary General Meeting was held where shareholders unanimously resolved to reduce the equity capital from Rs. 9,05,16,530 to Rs. 4,52,58,260 and the Securities Premium Account from Rs. 35,80,66,120 to Rs. 2,22,44,547 by adjusting against the debit balance in the profit and loss account.2. The resolution passed by the shareholders was in compliance with Section 100 to 104 of the Companies Act, 1956, Section 52 of the Companies Act, 2013, and other applicable provisions. The resolution was further subject to confirmation by the High Court of Karnataka or any other competent authority specified for this purpose. The reduction in share capital and securities premium account was based on legal provisions and company's Articles of Association.3. The Court found no impediment to accepting the resolution passed by the shareholders for the reduction of share capital and securities premium account. The paid-up share capital was reduced to Rs. 4,52,58,260, and the Securities Premium Account was reduced to Rs. 2,22,44,547. The adjustment and setoff against the debit balance in the profit and loss account were duly noted and accepted by the Court.4. The resolution was recorded in the minutes, confirming the reduction in share capital and securities premium account as resolved by the shareholders. The Court reiterated that there was no impediment to accepting the resolution, and consequently, the petition seeking reduction of share capital was allowed by the Court.5. The Court directed the order, including the minutes of the resolution, to be delivered to the Registrar of Companies within twenty-one days for necessary action. Additionally, the notice of reduction of paid-up equity share capital and securities premium account was to be published in 'The Hindu' and 'Udaya Vani' within fifteen days of registration of the order and minutes by the Registrar of Companies.6. The judgment emphasized compliance with the procedural requirements for reduction of share capital and securities premium account under the Companies Act, 1956 and 2013. The directions for publication and filing of the order with the Registrar of Companies were crucial to complete the process of reduction of share capital and securities premium account effectively.