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The National Company Law Tribunal (NCLT), Chennai, has allowed share consolidation and reduction of share capital in Simpson and Co. Accordingly, the paid-up equity shares of Rs 10 each in the share capital of the company will be consolidated into equity shares of Rs 2,500 each.
A bench comprising of R Sucharitha, Member (Judicial) and Anil Kumar, Member (Technical) pronounced the order on July 13 based on an application by the company filed before the Tribunal on November 27, 2019. The application sought to approve the consolidation of the entire authorised, issued, subscribed and paid-up equity share.
The bench also directed the company to create a trust to deposit the fractional shares of the dissenters.
“We further that in order the safeguard of Interest of the dissenting shareholders, who do not offer the shares to the company for cancellation of the shares held by them by accepting price of Rs 14,680 per share, the petitioner company shall facilitate constituting Trust, in which fractional shares of the dissenting shareholders shall be vested for their benefit arising thus shares through an appropriate deed, delineating and rights and entitlement of the beneficiaries and other matters incidental or ancillary thereto,” the order said.
On September 25, 2019, the company’s board had approved the consolidation of its share capital into shares of an amount larger than its existing shares by increasing the nominal value of the equity shares from Rs 10 per share to Rs 2,500 per share.
This ensured that every 250 equity shares with nominal value of Rs 10 held by a member 'are consolidated into 1 (One) equity share with nominal value of Rs 2,500 each. The consideration to be paid for the shares was determined as Rs 14,860 per share.
Subsequently, the company’s Extraordinary General Meeting was held on November 7, 2019. At the meeting, 63 shareholders holding 73,38,864 shares of face value of Rs 10 each were present in person or proxy. Of this, 12 shareholders holding 73,28,255 shares constituting 99.86 per cent in value approved and passed the said special resolutions for consolidation and reduction.
However, 47 shareholders holding 10,492 shares constituting 0.14 per cent voted against the said resolutions. The votes polled by four shareholders holding 117 shares were declared invalid. It was, then, submitted that the shareholders constituting 99.86 per cent, being the overwhelming majority, had approved the said resolutions.
The tribunal rejected the objections of the dissenting shareholders who sought higher value and ruled in favour of the company.
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