Share capital reduction sanctioned where losses were set off and creditor notice requirements were dispensed with after compliance review.

A company's proposed reduction of paid-up share capital was sanctioned to set off accumulated losses and align the balance sheet with the real value of assets and liabilities. The tribunal noted support from the board resolution, special resolution of shareholders, auditor's certificate showing no secured or unsecured creditors, compliance with accounting standards, and no objection from the Regional Director. As no objection was received from the Income Tax Department or other stakeholders, the statutory requirements were treated as satisfied and the procedural notice requirements to creditors and for publication were dispensed with.

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Issues: Whether the proposed reduction of share capital of the applicant company should be sanctioned and whether notice to creditors and publication of notice could be dispensed with.

Analysis: The applicant company sought reduction of paid-up share capital to set off accumulated losses and align the balance sheet with the real value of assets and liabilities. The filing was supported by the board resolution, special resolution of shareholders, auditor's certificate on the absence of secured and unsecured creditors, compliance with accounting standards, and no objection from the Regional Director. In the absence of opposition from the Income Tax Department or any other stakeholder, the statutory requirements were treated as satisfied and the procedural requirement of notice to creditors under the applicable rules was dispensed with.

Conclusion: The reduction of share capital was sanctioned, notice to creditors and publication of notice were dispensed with, and the application was allowed.

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