NCLT Mumbai Allows DEXIT Global's ₹203 Crore Preference Share Capital Reduction Under Companies Act

The Mumbai Bench of the National Company Law Tribunal (NCLT) on 9 July approved DEXIT Global Limited's (formerly NSEIT Limited) proposal to reduce its preference share capital under Section 66 of the Companies Act, 2013, holding that the reduction was fair, lawful and not against public interest.

A Bench of Judicial Member Ashish Kalia and Technical Member Sanjiv Dutt sanctioned the reduction, allowing the company to cancel preference shares worth up to Rs. 203 crore by returning the corresponding amount to preference shareholders. It observed:

"Considering the entire facts and circumstances of the case along with perusal of the documents and materials placed on record, the Company Petition is allowed."

DEXIT Global had approached the Tribunal seeking approval to reduce 2.03 crore preference shares, including 1 crore 7% cumulative redeemable preference shares and 1.03 crore Series A 7% optionally convertible redeemable preference shares, each having a face value of Rs. 100.

The company's Board approved the proposal on 1 March 2025, following which shareholders unanimously approved the reduction through a special resolution passed at an Extraordinary General Meeting held on 3 March 2025.

It also submitted that the preference share capital was initially raised to finance strategic acquisitions and support its technology business. It stated that after the sale of those investments and the change in ownership from NSE Investments Limited to CL Educate Limited, the company had surplus funds without any immediate business requirement, making the reduction of capital appropriate.

The Tribunal noted that no creditor objected to the proposed reduction despite statutory notices and newspaper publications. It also accepted the company's submission that the transaction amounted to a reduction of share capital under Section 66 of the Companies Act, 2013, which deals with capital reduction, and not a buyback under Section 68, which separately governs repurchase of shares.

Relying on judicial precedents including Birla Global Finance Ltd. and Shrish Vinod Shah (HUF) v. Bharti Telecom Ltd., the Bench held that Sections 66 and 68 operate as separate and independent mechanisms.

Accordingly, the NCLT approved DEXIT Global's petition after accepting the undertakings furnished by the company in response to objections raised by the Regional Director. It clarified that the order would not exempt the company from payment of applicable taxes, stamp duty, withholding tax or compliance with other statutory requirements.

For the Petitioner Company: Mr. Hemant Sethi a/w. Ms. Tanaya Sethi

For Regional Director (RD): Mr. Altaf Sheikh