TaxTMI 
TaxTMI 
2020 (10) TMI 339
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....he company was changed to Shreno Ltd., and fresh certificate of incorporation dated September 19, 2006 (CIN U26100GJ1944PLC000345) was obtained. 3. It has been submitted that the petitioner-company has equity share capital worth Rs. 49,31,56,600 and preference share capital of Rs. 50,02,53,850. The present proposal of reduction of capital pertains to reduction of only equity share capital. The equity shareholding pattern as on December 31, 2019 and as on date is as follows : Equity shareholding pattern Category of equity shareholder Amount (Rs.) % of holding in total equity share capital of the company 45,90,197 equity shares of Rs. 100 each, fully paid-up and held by the promoters and promoter group 45,90,19,700 93.08% 3,41,369 equity shares of Rs. 100 each, fully paid-up and held by persons other than the promoters and promoter group ("public shareholders") 3,41,36,900 6.92% It has been further submitted that the public shareholders, as indicated above holding 6.92 per cent. of the total equity share capital are 8,860 equity shareholders in number. Of the above 8,860 public shareholders of the company, around 8,443 (approx. 95.29 per ....
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....and rules made thereunder. In order to maintain fairness and transparency in determining the fair value of the equity shares, for the proposed repayment to the public shareholders for the proposed reduction of the equity share capital, the valuation report from M/s. RSBA Valuation Advisors LLP, a registered valuer as recognised under the Companies Act, 2013 was obtained. Further, the petitioner-company also engaged Vivro Financial Services P. Ltd., a SEBI registered category-I merchant banker to obtain a fairness opinion report on such valuation of equity shares of the applicant-company. Both the valuation report as well as the fairness opinion dated December 16, 2019 has been placed on record by the petitioner-company. 6. A meeting of the audit committee of the petitioner-company was convened and held on December 16, 2019 for approving the said valuation report and the fairness opinion on valuation. After considering the same and its implications, the audit committee approved the same and recommended the Board to consider the same. The board of directors, at its meeting held on December 16, 2019 considered the recommendations of the audit committee, the valuation report and the....
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.... at Rs. 3,00,53,114 (rupees three crores fifty three thousand one hundred and fourteen only) voted against the proposal. Hence, the resolution approving the proposed reduction of equity share capital was passed by the requisite majority of 72.73 per cent. in number and 92.09 per cent. in value of the preference shareholders casting valid votes. Copies of the scrutiniser's report for the aforesaid meetings are placed on record. 8. Hence, the requisite special resolution was duly passed at both these meetings and it was resolved as follows : "Resolved that pursuant to article 52 of the articles of association of the company and in accordance with section 66, section 52 and other applicable provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) and the rules made thereunder ('Act') and the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016, and subject to the confirmation of the hon'ble National Company Law Tribunal, and such other approvals and terms and conditions as may be required, and which may be agreed by the board of dir....
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....provals as may be required, the public shareholders of the company appearing as registered equity shareholders of the company as on the date to be determined by the board ('record date'), shall be paid a sum of Rs. 100 (Indian rupees hundred only) per equity share having the face value of Rs. 100 (Indian rupees hundred only) and a premium of Rs. 1,905 (Indian rupees one thousand nine hundred and five only) per equity share aggregating to a total sum of Rs. 2,005 (Indian rupees two thousand and five only) per equity share being the fair value of such equity share held by such public share holders and thereby cancelling and extinguishing all such equity shares of the company. Resolved further that the payment of consideration in excess of the face value of the equity shares held by the public shareholders shall be adjusted against the balance lying in the securities premium account of the company and accordingly the securities premium account of the company post capital reduction shall be reduced to the extent utilized in relation to the capital reduction. Resolved further that the payment of consideration to be paid to the domestic/resident public sharehold....
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....nd writings whatsoever as may be usual, necessary, proper or expedient and all type of documents, petitions, affidavits and applications in relation to the matters aforesaid. (2) To accept services of notices or other processes which may from time to time be issued in connection with the matters aforesaid. (3) To produce all documents or other evidences in connection with the matters aforesaid and all and any of other proceedings incidental thereto or arising thereat. (4) To make, prepare and submit any applications, petitions, appeals and judges summons before the NCLT, and/or any court, Tribunal, or all relevant authorities and respond to the appropriate authorities. (5) To file applications, scheme (if required), petitions, affidavits, vakalatnama and/or other legal documents with the NCLT, as may be required for confirmation of the capital reduction by the NCLT upon the capital reduction becoming effective and operative, and/or any other regulatory authorities for obtaining its approval. (6) Withdraw the application/petition filed before the NCLT for the capital reduction at any stage, in case any change....
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.... of the company for discharging consideration (viz., KYC documents, documents asked by bank, payment pro cessing intermediaries, etc.). (15) To provide necessary declarations/certificates in relation to the capital reduction capturing the true and factual aspects of the company. (16) To comply with all the necessary formalities, compliances and disclosures in this regard and to sign and file the necessary forms or documents with the relevant authorities, including the Registrar of Companies. (17) To authenticate all the necessary documents as 'certified copies' or in any other manner as may be required, including affixing the common seal of the company on any documents in connection with this resolution. (18) To do all such acts, deeds, matters and things as may be deemed necessary, expedient, usual or proper and to settle any question or difficulty that may arise. (19) To delegate any or all of the powers conferred upon them by this resolution to any other officer(s) or authorised representative(s) of the company." 9. It has been further clarified by the petitioner-company that the net worth of t....
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....4, 2020. The notices were served on the regulatory authorities, viz., the Central Government, through Regional Director, Gujarat and Registrar of Companies, Gujarat on March 13, 2020. The said compliances were confirmed by affidavit dated March 16, 2020. Pursuant to the said notice, the Regional Director filed a representation in form of the affidavit dated June 12, 2020. The petitioner-company has placed on record an additional affidavit dated June 16, 2020 in response to the same. 12. (i) The Regional Director has sought requisite compliances of the pro-visions of the FEMA and RBI Guidelines in view of some of the public shareholders being non-resident Indians/foreign nationals/foreign bodies corporates. The petitioner-company has confirmed the compliances so far and undertaken further compliances while undertaking repayment of the capital to such shareholders. (ii) The Regional Director has also sought confirmation about the requisite compliances under the Income-tax Act and the petitioner-company has undertaken to comply with the applicable provisions of the Income-tax Act. (iii) The Regional Director has observed lapse in compliance with regard to directio....
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.... in our view there is no reason not to confirm the proposed action of the petitioner to reduce its capital. The said proposal does not prejudicially affect anyone. Accordingly the resolution dated January 28, 2020 is hereby confirmed. 15. It has been noticed by this Tribunal that a caveat was filed on behalf of some shareholder/s. The petitioner has confirmed the supply of copy of the application with all its annexures in the month of March. However, no further submissions have been forwarded by the said party even after the lapse of the prescribed period of 90 days for filing the objections. 16. In view of the above discussions, we accept this petition filed by the applicant and allow reduction of share capital and pass the following : ORDER Minute under section 103(1) "The issued, subscribed and paid-up equity share capital of M/s. Shreno Ltd., is henceforth, by virtue of a special resolution of the company dated January 28, 2020 and by virtue of the sanction granted by the hon'ble National Company Law Tribunal on September 3, 2020 ; reduced from Rs. 49,31,56,600 divided into 49,31,566 equity shares of Rs. 100 each, to Rs. 45,90,19,700 divided....