AI Drafter 
TaxTMI 
TaxTMI 
2003 (1) TMI 720
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....roduced as annexure-A to the Petition. 2. The authorized share capital of the company is Rs. 20 Crores divided into 2 crores equity shares of Rs. 10/- each, of which the Rs. 71,25,680-00 shares have been issued and have been fully paid up. The Company also has a Share Premium of Rs. 30,79,07,000/- as on 31^st March 2002. Article 4(3) of Articles of Association provides for reduction of share capital or share premium account by resolution. 3. The company during May 2001 acquired an intellectual property right in software product OUTsmart which was a wireline fraud management system and Incharge which is en inter-carrier billing verification product from a company called Magardi, Inc., from Price Water House Coopers, INC, who were the r....
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....company by using and applying the unutilized share premium account which is being carried over from year to year and the proposed reduction of Share Premium Account will be merely a book entry. The proposed reduction does not in any way affect the right of share holders or creditors and is beneficial to them. The proposed action will also not result in reduction of unpaid share capital or payment to any share holder of nay paid up share capital. Therefore, the proposed reduction will be beneficial to the Company, its share holders and all concerned. Therefore the Company by resolution passed in accordance with Section 189 of the Companies Act, 1956, at a General Meeting thereof, held after due notice as provided for in the Act on the 27^th ....
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....er." 5. The proposed reduction of the Share Premium Account of the company will not prejudice the rights of any creditors of the company in any manner whatsoever inasmuch as the proposed reduction of the share premium account does not involve either the diminution of any liability in respect of unpaid capital or the payment to nay share holder of any pain up capital. Therefore, the company wants the following minutes to be registered under Section 13(1) (b) as under: "The company do utilize a part of the share premium account for the purpose of writing off the value of intangible assets - the total cost of acquisition of the software and related expenses as recorded in the books aggregating to Rs. 15,89,56,637 against the share premiu....
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....ived on issue of shares. " 78(1) where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or vale of the premium on those share shall be transferred to an account, to be called "the share premium account", and the provisions of the Act relating to the reduction of the share capital of a company shall, except as provided in the Section, apply as if the share premium account were paid-up share capital of the company." Sub-section (2) provides the circumstance under which the premium account can be applied by the company. As applying the unutilized share premium account for adjusting the cost of intangible asset against the share premium account is not one of the instance provided und....
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....Company is done in good faith and is not contrary to any low and is for the benefit of the shareholders and creditors. Therefore, the special resolution passed by the Company requires to be confirmed and the proposed minutes be approved. Accordingly, I pass the following order: (1) That the reduction of the share capital of the above company resolved on and effected by the special resolution passed a general meeting of the said company held on the 27^th Day of June 2002, which resolution was in the words and figures following, viz; "Resolved that pursuant to Section 76, 100 and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modifications or re-enactment thereof, for the time being in....