TaxTMI 
TaxTMI 
2020 (9) TMI 55
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.... House, J. N. Heredia Marg, Ballard Estate, Mumbai-400 001. 3. The authorized share capital of the petitioner is Rs. 50,00,000 consisting of 4,99,000 equity shares of Rs. 10 each and 100, 11 per cent. non-cumulative redeemable preference shares of Rs. 100 each. The issued, subscribed and paid-up share capital is Rs. 44,29,480 consisting of 4,42,948 equity shares of Rs. 10 each. 4. As on September 28, 2017 the petitioner had 13,063 members, out of which 13,053 members belong to the non-promoter group and collectively hold 10.81 per cent. of the share capital, while the remaining 10 members belonging to the promoter group hold the balance 89.19 per cent. of the share capital of the petitioner. 5. The petitioner-company in the past several years received several applications from individual shareholders with the request to purchase their shareholding in the petitioner-company. In view of this request, various methods of exit to the public shareholders were discussed during the board meeting on June 5, 2017 pursuant to which the petitioner-company proposed to reorganize the share capital by way of consolidation of equity shares into larger denomination. The resolution is as follows ....
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....es Ltd., who consented to act as a "trustee" to sell/dispose off the consolidated equity shares resulting from consolidation of such fractional entitlements at the sale price of Rs. 3,400 equity shares of Rs. 10 each to such person(s) as the trustee may deem fit and distribute the sale proceeds among the fractional shareholders in due proportion of their fractional entitlements. The proceeds will be deposited with an escrow agent appointed by the trustee, who shall be responsible for proportionately distributing the proceeds amongst the shareholders who would otherwise have been entitled to fractional entitlements. The escrow agent shall upon receiving instructions for release from the trustee, release the funds to the fractional shareholders as provided herein. 9. The petitioner submits that proposed consolidation of shares would not cost reduction of share capital and would not cost in any way detrimental to the creditors of the petitioner. 10. The share capital of the petitioner upon consolidation of shares is set out hereinabove : Particulars No. of equity shares of Rs. 5,000 each Amount (Rs.) Authorized share capital : 1,000 50,00,000 Issued, subscribed and paid-up ca....
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....larly when their holdings are very small. (d) The main petition also states that the petitioner had obtained a valuation report from an independent and reputed valuer, M/s. Bansi S. Mehta and Co., Chartered Accountants for the purpose of valuation, which was presented before the board of directors meeting held on June 5, 2017. The price per equity share of nominal value of Rs. 10 each of the petitioner, calculated on the basis of asset based approach method was fixed at Rs. 3,400 per fully paid-up equity share of Rs. 10 each. The copy of the valuation report is annexed as exhibit D in its petition by the petitioner. (e) The petitioner had passed the special resolutions at the extraordinary general meeting held on July 18, 2017 (exhibit E of the petition) for reclassification and for consolidation of shares. The members of the petitioner also passed another resolution for resultant increase in the issued, subscribed and paid-up share capital by Rs. 520 in the annual general meeting held on September 28, 2017 (exhibit E of the petition). (f) The present market value of the underlying assets of the company (at the time of passing of resolution) was not considered for the purpose....
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....shares held by non-promoter shareholders. It is a regressive step as it may lead to selective cancellation of minority shareholding using the brute majority by the promoter shareholders which is act of oppression and mismanagement and in any case outside the scope of section 61 of the Companies Act, 2013. (n) The tone and tenure of the resolution 2 and the explanatory statement make it clear that the same is targeting the minority shareholders. The equity interest, justice and good conscience have been totally ignored by the company and its directors in order to protect and enrich the promoter shareholders in the said resolution. Reply to the objection by the petitioner-company : 14. The petitioner-company made the following objections in reply to the above raised objections by the shareholders : (a) The petitioner-company has given the detailed distribution of shareholding in the petition which is annexed as exhibit A to the petition. He further submits that for ready reference given below is the shareholding pattern : Shareholding No. of shareholders No. of shares % of shareholding Promoters shareholding 8 3,95,076 89.19 Total public shareholding 9,458 47,872 1....
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....y stream of income and however, the petitioner-company is in the business of providing financial services and its assets primarily comprise of investment and financial assets and there is an element of uncertainty attached to the future stream of income as in case of investment, the gains/loss/dividend cannot be ascertained with certainty over future, they further say that under the market value approach, the valuer had arrived at a fair value considering the volume weighted average price of the share over a suitable period of time and however, the equity shares of the petitioner-company are not listed on any stock exchange and therefore the market value approach is not relevant. They further say that the same has been provided in the valuation report. (e) The valuation report was made available for inspection by the members of the company at the registered office of the company on all working days between 11:00 a.m. to 1:00 p.m. till the date of the extraordinary general meeting. The objector had not requested the valuation report and the objector has also not attended the annual general meeting and extraordinary general meeting and has not voted against the scheme and as such t....
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.... to small shareholding of many shareholders, the dividend amount payable to such shareholders are also small and negligible owing to which, many of them don't encash the dividend amounts. (d) The proposed share consolidation does not involve any payment to be made by any shareholders. (e) Each consolidated share will rank pari passu in all respects with each other. There will be no impact on the effective dividend yield of the company's shares. (f) The shareholders will have good liquidity in their hands and rea sonable return on their investments. 19. The extraordinary general meeting further captured the aspect that the consolidation of the equity shares of the company would require approval of the shareholders and further confirms that this consolidation of the equity shares of the company are in the best interest of the members and recommended the special resolutions to be passed. With the above observations, a special resolution was passed by the members of the petitioner-company at the extraordinary general meeting which was held on July 18, 2017. 20. The objector having received the notice failed to participate in the extraordinary general meeting and have fi....