The
Procedure of Reduction of Share Capital of the Company.
Under the provisions Section 66 of the Companies
Act, 2013 a company limited by shares or limited by guarantee and having a
share capital may by a
special resolution, reduce the share capital subject to confirmation by the
Tribunal in any of the manner:
(a) By extinguishing
or reducing the liability on any of its shares in respect of the share capital
not paid-up
(b) By
canceling any paid-up share capital which is lost or is unrepresented by
available assets
(c) By
paying off any paid-up share capital which is in excess of the wants of the
company
Such reduction shall be made if the company is not in default in the repayment of any
deposits accepted by it or the interest payable thereon.
Form
of application or petition for reduction of share capital under Section 66
The company for reduction in capital can make an application
in RSC-1 to the tribunal along with
prescribed fee ( Rs.5000 ) and the following documents:
·
List of Creditor giving
particulars with respect to name , address and amount outstanding duly
certified by Managing Director or by two of the Directors as true & correct
as on a date not earlier than 15 days prior to the date of application.
·
A certificate from the
Auditor that list of creditor filed with application is correct as per the
records of the company verified by him
·
A certificate from the
Auditor and declaration from a Director that company is not in arrear of
repaying deposits accepted or of interest thereon on the date of application;
·
A Certificate from the
Auditor that the company for such reduction of the share capital has made proper accounting
treatment and that is in conformity of accounting standard specified in Section
133
·
The copies of list of
creditor must be kept at registered office for inspection by any person.
Issue
of Notice and Directions by NCLT
Ø The Tribunal within 15 days from the date of
application give notice or direct to give notice to:
·
the Central Government,
Registrar of Companies in form RSC-2;
·
the Securities and Exchange
Board of India ( for listed companies), in form RSC-2
·
the Creditors of the company,
in form RSC-3
(The Creditors within 7 days or within such period as may be decided by
the tribunal)
Ø The Tribunal shall give directions for publication
of notice in Form RSC-4, for seeking objection within 7 days in English
and Vernacular Language Newspaper with circulation in the State of Registered
Office ad Tribunal may direct to upload such notice on the website of the
Company.
Ø The Notice must state the amount of proposed
reduction of Share Capital, place where the list of creditor be inspected and
time within which objection to be given. The Tribunal can fix the time maximum 3
months for filing of such objection from the date of publication.
Ø The company or person so directed within 7 days from
the date of issue of issue of notice give an affidavit in form RSC- 5 confirming
to the tribunal dispatch & publication of notice.
The
Representation by Central Government, Registrar Etc
The representation or objection by any authorities
or creditors of the company can be made within 3 months from date of receipt of
such notice in case no such representation is received within such period by
the Tribunal then it will be presumed that they have no objection to such
reduction.
Procedure
if any representation and objection received
The Company
shall within 7 days of the expiry of the period up to which representations or
objections were sought file its responses for such objections to the tribunal.
The tribunal has full discretion to make such order
as it think fit for holding an enquiry or for re hearing. At the time of
hearing if the tribunal is of view that the debt or claim of every creditor has
been discharged or secured or his consent is obtained, the Tribunal is
satisfied
Ø The Tribunal may issue an order confirming the
reduction of share capital and approving the minute may include any terms and
conditions as may deem fit in form
RSC-6.
Ø The Registrar may shall issue Certificate in form
RSC-7 under Sec 66 (5).
The provisions of Section 66 shall not be applicable
to Buy-back of securities.
Important forms for Reduction of Share Capital
