https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=291350 https://www.taxtmi.com/caselaws?id=291350 Reduction of share capital - Section 66 of the Companies Act, 2013 (Act) read with Rule 2 of the National Company Law Tribunal (Procedure for Reduction of Share Capital) Rules, 2016 - HELD THAT:- The proposal for reduction of share capital involves exit of only the identified shareholders on the ground that the capital reduction will give an opportunity to the identified shareholders to exit at a fair valuation, as the shares held by them are otherwise not marketable or tradeable, since the shares of BTL were delisted in 1999-2000. It is also stated that BTL has adequate reserves/funds to carry out the proposed capital reduction and such capital reduction will also enable BTL to save administrative and other costs associated with servicing a very small percentage of its shareholding held by a large number of shareholders dispersed across the country and overseas. The provision regarding purchase of its own shares by a company is contained in Section 68 of the Act. The petition presently under consideration is filed under Section 66 of the Act for confirmation of reduction of share capital. Therefore, the satisfaction of the conditions provided for under Section 68 of the Act are irrelevant in the present proceeding. We may also add here that Section 66(6) of the Act provides that nothing in Section 66 shall apply to buy back of its own securities by a company under Section 68 of the Act and therefore, the Sections are regarded as independent. The contention raised is not accepted. It has been pleaded by the authorized representative/counsel of the intervention applicants that passing of resolution through postal ballot and e-voting without conducting personal/physical voting is violative of the rights of the identified shareholders to avoid free exchange of views and ideas amongst the identified shareholders. The Learned Senior Counsel for BTL has referred to Section 110 of the Act in which some types of business are not to be undertaken by postal ballot. It is pleaded that the present business is not covered by the exceptions and that holding of Extraordinary General Meeting at one location is burdensome for the shareholders since they find it difficult to travel long distance for attending the meeting and therefore, postal ballot helps increase voter participation. The plea raised is therefore, not accepted. The prejudice is caused to the identified shareholders by the proposal in the explanatory statement that the dividend distribution tax of Rs. 33.55 per share will be further reduced from the value per share of Rs. 196.8 given by the valuer and the fairness opinion. The prejudice is a concerted attempt to force a class of shareholders to divest themselves of their holdings at a rate far below what is reasonable, fair and just and connotes a form of discrimination. In the present case, we have found no patent unfairness in the valuation report dated 19.06.2018. We have however held that the deduction of DDT from the value per share as per the valuation report dated 19.06.2018, causes prejudice to the identified shareholders and is a concerted attempt to force a class of shareholders to divest themselves of their holdings at a rate far below what is reasonable, fair and just and connotes a form of discrimination. We note that 76.35% of the identified shareholders voting on the special resolution accepted even the reduced value of Rs. 163.25 per equity share after deduction of DDT from the value per share as per the valuation report dated 19.06.2018. We note that there are no objections to the scheme from the creditors - as per Section 66(3) of the Act, the Tribunal can make an order confirming the reduction of share capital on such terms and conditions as it deems fit. As per Rule 6(2) of the Rules, the order confirming the reduction of share capital be issued by the Registrar in Form No. RSC-6. Application disposed off. Case-Laws Companies Law Fri, 27 Sep 2019 00:00:00 +0530