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Note On Reduction of Share Capital

The document summarizes the process for reducing paid up share capital of XYZ Limited under Section 66 of the Companies Act, 2013. XYZ Limited proposes to reduce its paid up capital of Rs. 20.10 crores to pay off excess capital to shareholders. It lists the key steps required, including obtaining board approval, shareholder approval through a special resolution, applying to NCLT with necessary documents, providing notice to stakeholders, and obtaining an order from NCLT confirming the reduction. Upon receipt of the order, XYZ Limited must register the reduction with the Registrar of Companies within 30 days.

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205 views3 pages

Note On Reduction of Share Capital

The document summarizes the process for reducing paid up share capital of XYZ Limited under Section 66 of the Companies Act, 2013. XYZ Limited proposes to reduce its paid up capital of Rs. 20.10 crores to pay off excess capital to shareholders. It lists the key steps required, including obtaining board approval, shareholder approval through a special resolution, applying to NCLT with necessary documents, providing notice to stakeholders, and obtaining an order from NCLT confirming the reduction. Upon receipt of the order, XYZ Limited must register the reduction with the Registrar of Companies within 30 days.

Uploaded by

Sudha J
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Note on Reduction of Share Capital of Regkinetics Services Limited under Section 66 of the Companies Act, 2013.

S.No: Particulars
1 Name of the Company XYZ Limited
2 CIN U12345TG1990PLC123456
3 Names of Directors 1) Mr. A 2) Mr. B 3) Mr. C
4 Share Capital
Authorised Share Capital Rs. 25,00,00,000
Paid up Share Capital Rs. 20,10,00,000
5 No: of Share holders 1. Holding Company Limited - 2,00,99,994 shares
2. Mr. Shareholder 1 - 1 share
3. Mr. Shareholder 2 - 1 share
4. Mr. Shareholder 3 - 1 share Nominee shareholders of
5. Mr. Shareholder 4 - 1 share Holding Company Ltd
6. Mr. Shareholder 5 - 1 share
7. Mr. Shareholder 6- 1 share
6 Face Value per Share Rs. 10/- each
7 Available Cash Balance Rs. 20 crores/-
8 Objectives The object of reduction of share capital is to pay off the capital which is in excess of the requirements of the
company to the shareholders.
9 Option Under Section 66 (1)(ii) - Subject to confirmation by the Tribunal on an application by the company, a company
Paying off or returning paid up limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the
capital not wanted for the purposes share capital in any manner and in, particular, pay off any paid up share capital which is in excess of the wants
of the company of the company:
Process - A. Application to NCLT
An application to the Tribunal to confirm a reduction of share capital of a company shall be in Form No. RSC-1
and fee shall be, as prescribed in the Schedule of fee to these rules.
An application to confirm a reduction of share capital of a company shall be accompanied with -
(a) the list of creditors duly certified by the Managing Director, or in his absence, by two directors, as true
and correct, which is made as on a date not earlier than fifteen days prior to the date of filing of an application
showing the details of the creditors of the company, class-wise, indicating their names, addresses and amounts
owed to them; - The Company has no creditors. Prepare a list showing Nil Creditors certified by two
directors.
(b) a certificate from the auditor of the company to the effect that the list of creditors referred to in clause (a) is
correct as per the records of the company verified by the auditor; - Obtain auditors certificate verifying
Company has no creditors.
(c) a certificate by the auditor and declaration by a director of the company that the company is not, as on the date
of filing of the application, in arrears in the repayment of the deposits or the interest thereon; - Obtain auditors
certificate verifying the same and
(d) a certificate by the company’s auditor to the effect that the accounting treatment proposed by the company for
the reduction of share capital is in conformity with the accounting standards specified in section 133 or any other
provisions of Act. – GFRT team to confirm
(3) Copies of the list of creditors shall be kept at the registered office of the company and any person desirous
of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the
same on payment of the sum of rupees fifty for inspection and for taking extracts on payment of the sum of
rupees ten per page to the company.

B. Notice by Tribunal 66(2)


The Tribunal shall give notice of every application made to it under Section 66(1) to:
i) The Central Government (Regional Director);
ii) The Registrar (ROC); and
iii) The Creditors of the company
It shall take into consideration, the representation made to it, if any, within three months from the date of receipt
of notice. If no representation has been received within said period, it shall be presumed that they have no
objections.
C. Confirmation of Reduction of Capital [Section 66(3)]
The Tribunal may, if it is satisfied that the debt or claim of every creditor has been discharged or determined or
has been secured or his consent is obtained, make an order confirming reduction of share capital on such terms
and conditions as it deems fit.
D. Publication of the order of the Tribunal [Section 66(4)]
The order of confirmation of the reduction of capital by the Tribunal shall be published by the company in such
manner as Tribunal may direct.
E. Company shall deliver a copy of order of Tribunal to Registrar [Section 66(5)]
The company shall deliver a certified copy of the order of the Tribunal and of a minute approved by the
Tribunal showing—
(a) the amount of share capital;
(b) the number of shares into which it is to be divided;
(c) the amount of each share; and
(d) the amount, if any, at the date of registration deemed to be paid-up on each share,
to the Registrar within thirty days of the receipt of the copy of the order, who shall register the same and issue a
certificate to that effect.
10 Activities to be done 1. Give Notice to Hold a Board Meeting.
2. Hold a Board Meeting to – a) approve to reduction, b) notice convening EGM and c) authorisation to
represent Co. at NCLT.
3. Hold EGM and pass special resolution to reduce the paid up capital subject to NCLT approval.
4. File MGT-14 with ROC within 30 days of passing special resolution.
5. Apply to NCLT in Form RSC-1
6. The application shall be accompanied with a) List of Creditors b) Certificates of auditors that at list of
creditors is correct; company is not in arears of repayment of deposit and Accounting Treatment proposed
by the company for reduction of share capital is in conformity with the Accounting standards.
7. The NCLT shall within 15 days of submission of the application give a notice to Central Govt (RD), ROC
in Form RSC-2 and to every creditors of the company in Form RSC-3.
8. The NCLT shall also give direction for the notice to be published in Form RSC-4 within seven days of such
direction in a leading English and vernacular language newspaper and for uploading on the website of the
company.
9. The company shall file an affidavit in Form RSC-5 confirming the dispatch and publication of the notice
within seven days from the date of issue of such notice.
10. The NCLT may dispense with the requirement of giving notice to the creditors or publication of notice, if
every creditor has been discharged or secured or given his consent.
11. Representation by ROC, SEBI and creditors shall be sent to NCLT within 3 months of receipt of notice and
copy of which shall also be sent to the company. If no such representation has been received by NCLT
within the said period, it shall be presumed that they have no objection.
12. Company shall send the representation or objections so received alongwith responses of the company
thereto within 7 days of expiry of period upto which objections were sought.
13. NCLT may hold any enquiry on adjudication of claim and/or give direction for securing the debts of the
creditors.
14. The order confirming the reduction of share capital shall be in Form RSC-6.
15. The company shall deliver a certified copy of the order of the NCLT under sub-section (3) and of minute
approved by the Tribunal to the ROC and file E-form INC-28. within 30 days of the receipt of order.
16. The ROC shall issue a certificate to that effect in Form RSC-7.
11 Questions 1. Does the no. of shares reduced are still available under Authorised share capital for further issuance ?
2. Whether the reduction of share capital is in conformity with the accounting standards specified in section
133 or any other provisions of Act.

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