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The National Company Law Tribunal, Kochi Bench allowed for Josco Jewellers Pvt. Ltd. to reduce their share capital from Rs. 120 crores to Rs 1 crores after the petitioner company entered into an agreement of transferring and selling business to one of its flagship business, Josco Bullion Traders Pvt. Ltd.
The decision came in after the Board of Directors passed a special resolution where they felt that the paid-up capital structure was more than what they required and it was necessary to reduce it.
The company filed a petition under Section 66 of the Companies Act, 2013. According to the petitioner, they had approached the NCLT and sought for a reduction in their share capital as approved by the Board to waive off the obligation of issuing notice to creditors and publishing it in newspapers. The business agreement was between Josco Jewellers Pvt. Ltd. and Josco Group where the petitioner company transferred the jewellery business to the flagship company. The special resolution passed by the Board of Directors was in compliance of section 66(1) of the Act.
The bench observed that according to the companies Articles of Association, the company is allowed to reduce its share capital and is allowed to divide its shares in accordance with the Companies Act, 2013. The bench observed that the authorized share capital of the company was Rs 120 crore divided into Rs 1,20,00,000 equity shares of Rs 100 each were issues and paid fully. The court held that since all the required statutory procedures had been fulfilled and there had been no objection by any of the shareholders submitted to the bench, they would allow for the petitioner’s prayer. The court also directed the company to make public notice of the reduction in the newspapers.
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