Share capital reduction at fair value upheld despite selective exit and buy-back objections.

Reduction of share capital was sanctioned where creditor protection requirements were met, with creditors consenting or their claims discharged, secured or determined and no opposition filed. The shareholder approval was unanimous, the cancelled share consideration was supported by a registered valuer's assessment, and the accounting treatment was certified by the statutory auditor. The objection that the proposal was selective did not prevent sanction because the reduction was structured to give identified minority shareholders an exit at fair value. The contention that it was in substance a buy-back was rejected, as reduction of capital and buy-back operate in separate fields.

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Issues: Whether the proposed reduction of share capital should be sanctioned, having regard to creditor protection, shareholder approval, fairness of valuation, and the distinction between reduction of capital and buy-back of shares.

Analysis: The petition satisfied the requirements for reduction of share capital under the Companies Act, 2013. The creditors had either consented or their claims stood discharged, secured, or determined, and no objector appeared to oppose the petition. The proposed reduction had been unanimously approved by the shareholders, the consideration for the cancelled shares was supported by a registered valuer's assessment, and the accounting treatment was certified by the statutory auditor. The objection that the proposal was selective did not defeat sanction, since the reduction was structured to provide an exit to identified minority shareholders on a fair value basis. The objection that the proposal was in substance a buy-back was also rejected, as reduction of share capital and buy-back operate in independent fields.

Conclusion: The reduction of share capital was sanctioned and confirmed.

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