TaxTMI 
TaxTMI 
2019 (12) TMI 478
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....portion of the order at paragraph-6 is reproduced here at: ... "6. Furthermore, on perusal of the Circular No. SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016 at the Annexure-A, para (vi), the Promoters are liable to acquire shares that are not offered under the exit offer up to a period of one year from the completion of offer. However, it appears the Promoters of the Company have not utilized this provision to acquire all the shares of the public shareholders after completion of one year. Instead, they have appeared before this Tribunal for purchasing shares and providing an exit route to the public shareholders, but under the pretext of consolidation of the share capital. This evinces an intention to avoid compliance with necessary provisions of Companies Act, 2013 and SEBI regulations. We are also concerned about the interests of the minority shareholders that expressed their concern of reduction in their voting percentage in an arbitrary manner." ... 3. From the perusal of the impugned order, NCLT relied upon SEBI Circular No. SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016 and one of its clauses viz. that the Promoter are liable to ac....
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....ed Counsel for respective parties. Perused pleadings, documents filed in their support. The Appellant Company was incorporated as a Public Limited Company by shares. The authorized share capital of the Company is Rs. 75 lakhs divided into 6,05,500 equity shares of face value of Rs. 10/- each and 14,500 Redeemable Cumulative Preference shares of value of Rs. 100/- each. It is seen that the equity shares of the company were initially listed on various stock exchanges. The Security Exchange Board of India vide its circular No. SEBI/HD/MRD/DSA/CIRP/P/2016/110 dated 10.10.2016 stipulated the procedure and process for exit of Exclusively Listed Companies from the Dissemination Board. Based on the same, the Promotors of the Company provided an exit opportunity to all the public shareholders by offering to buy the equity shares of the company. The Exit Offer was valid upto 18.03.2017. The National Stock Exchange, listing Department, vide its circular dated 18.10.2017 (Page-88 of the Paper Book) had been removed the Appellant Company from the Dissemination Board, shown at serial no. 17 of the Circular. At page 90 of the Paper Book, the reason for removing from Dissemination Board shown as E....
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....-5 as mentioned in paragraph-5 of page-96 of Paper Book. We had a doubt whether the Article of Association permit the Company to consolidate and divide the shares. We perused the Article of Association of the Company (Page 51 of Paper Book) of the Company and Article 41(a) refers to the consolidation and divide of all or any of its share capital into shares of larger amount than its existing shares. After decision taken in the Board Meeting dated 19.03.2018, the Company held its Extra Ordinary General Meeting (in short EGM) on 14.04.2018. 8. The resolution passed therein (vide page 101 of the Paper Book) wherefrom EGM resolved to alter Memorandum of Association(MOA) and Articles of Association (AOA) by substituting the clause as per the decision taken in the Board Meeting and in EGM respectively. 9. The Practicing Company Secretary of the Company submitted his report dated 18.04.2018 to the Whole Time Director and Chairman of the EGM duly enclosing the minutes at pages 101 to 104 of the Paper Book wherefrom it is evident that 95.12% votes cast in favour of the resolution for consolidation and 3.10% votes cast against the said resolution. Therefore, the resolution was approved....
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.... ... 12. Page-3 at paragraph -3 of the Affidavit, vide Diary No. 16144 dated 19.11.2019, filed by the learned Counsel for the Appellant, the names of seven shareholders, who objected to consolidation of shares and some of them have sold their shares, is given and the same is extracted herein below: ... "3. That it is stated that during the pendency of this Appel the majority of the objecting shareholders have sold their shares in full to the promoters of the Appellant Company. That the shareholding of the shareholders in the Appellant Company as on date is mentioned herein below: Serial No. Name of the Shareholder No. of Shares held as on EGM No. of Shares held as on 14.11.2019 Comments 1. Mr. Mahendra Girdharilal 9515 NIL Sold on 09.07.2019 2. Shri PP Zibi Jose, 6820 NIL Sold on 08.02.2019 3. Ms. Kavitha, 922 NIL Sold on 03.07.2018 & 11.08.2018 4. Ms. G Jaiyashri 90 NIL Sold on 03.07.2018 & 11.08.2018 5. Mr. R M Govindan 100 NIL Sold on 03.07.2018 & 11.08.2018 6. Mr. Gopal Krishna Pai 172 172 Continues to be shareholder 7. Sm....