The Chandigarh Bench of the National Company Law Tribunal (NCLT) on 25 March, approved the petition filed by UK India Business Council India Private Limited seeking a reduction of its share capital under Section 66 of the Companies Act, 2013.
A Bench comprising Judicial Member Khetrabasi Biswal and Technical Member Kaushalendra Kumar Singh held:
“In view of the submissions made by the Petitioner Company, we are of the considered view that the reduction of share capital of the Petitioner Company will not have any adverse effect. Accordingly, the present Petition is allowed and the reduction of share capital of the Petitioner Company is hereby approved….”
UK India Business Council India Pvt. Ltd. incorporated on 26 May 2008, provides consultancy and membership services to facilitate trade and investment between the UK and India. It filed the petition through its authorised signatory, Vikram Plaha.
As of 31 March 2023, the company's paid‑up capital stood at Rs 23.65 crore, divided into 2.36 crore equity shares of Rs 10 each. The Board of Directors found that the company held excess capital for its operational needs.
On 22 April 2024, the Board approved, and on 24 April 2024, shareholders ratified a scheme to cancel 1.31 crore shares. This reduced the capital by 55.39% to Rs 10.55 crore. The company planned to remit Rs.13 crore to shareholders and set off accumulated losses of about Rs 10.48 lakh.
The company supported the proposal with a fairness valuation report from a Chartered Accountant and a valuation certificate from a registered valuer under FEMA regulations. It issued notices to creditors and statutory authorities, and shareholders passed a special resolution in April 2024.
The company confirmed that the Statutory Auditor issued no adverse remarks and that no investigation or proceedings were pending. It assured the Tribunal that the reduction would not affect ordinary operations or its ability to honour commitments and pay debts in the normal course of business. The company served notices to statutory authorities and unsecured creditors on 31 May 2024.
The NCLT observed that the Articles of Association authorised the reduction and that shareholders unanimously approved it. It also noted that statutory authorities' concerns were satisfactorily addressed and that compliance under FEMA and the Companies Act was ensured. The company obtained consent from unsecured creditors holding 78.9% of the total outstanding amount.
The Tribunal reiterated that companies can reduce capital if it does not harm creditors or public interest and if they follow statutory procedures.
Accordingly, it allowed the petition.
For the Petitioner: Mr. Anand Chhibbar, Senior Advocate along with Mr. Anubhav Rastogi and Ms. Swati Vashisht, Advocates
For the RD/ROC: Ms. Deepmala Bagri, DRoC Chandigarh
For the Income Tax Dept.: Mr. Varun Issar Sr. Standing Counsel