Share capital reduction upheld where articles, shareholder approval, creditor repayment and no objections supported confirmation.

A company's reduction of share capital under the Companies Act, 1956 was found legally sustainable because its articles authorised the reduction, the board and shareholders approved it by special resolution, and the form of minute reflected a reduction with payment to shareholders at a premium. The record also showed that trade creditors had been repaid and no objections were received after publication of notice, supporting confirmation of the proposed reduction. The reduction was accordingly confirmed.

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Issues: Whether the reduction of share capital proposed by the company deserved confirmation under the Companies Act, 1956.

Analysis: The company was authorised by its articles to reduce share capital, the proposed reduction was approved by the board and by special resolution of the shareholders, and the form of minute reflected a reduction coupled with payment to shareholders at a premium. The record also showed that the trade creditors had been repaid and no objections were received after publication of notice.

Conclusion: The reduction of share capital was held to be legally sustainable and was confirmed.

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