Checklist and Procedure of Reduction of Capital Under Companies Act, 2013 By CS Deepesh Maheshwari


I. As Per Section 66 of the Companies Act, 2013 and National Company Law Tribunal (NCLT Procedure for Reduction of Share Capital of Company) Rules, 2016:
 

S.NO.

PARTICULARS

TIME PERIOD

(No. of Days)

1.

 

 

Power to Reduce Share Capital shall have been authorized by the Articles of Association. (The Company’s Article No. 19 authorizes the Company to Reduce its Share Capital)

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2.

 

Issue Notice to hold Board of Directors Meeting to approve the Scheme of Reduction of Capital.

7 days

3.

 

 

 

 

Convene and hold a Board Meeting for following matters:

(i)       Approve the Scheme of Reduction of Capital and pass the Board Resolution.

(ii)       Approve the Notice of Extra-ordinary General Meeting for passing Special Resolution.

--

4.

 

Finalization of the Scheme of Reduction of Capital. Audited Accounts of the Company for the F.Y. to be kept ready.

--

5.

 

Issue Notice along with Postal Ballot Papers to hold Extra-Ordinary General Meeting of the Members.

23 clear days

6.

 

Hold Extra-Ordinary General Meeting and pass Special Resolution for Reduction of Share Capital.

--

7.

 

 

File E-Form MGT-14 along with Certified True Copy of the Special Resolution (SR) and Explanatory Statement with the Registrar of Companies (ROC)

Within 30 days from the date of passing the SR

8.

 

 

Prepare a List of Creditors, which should be class-wise, indicating their names, addresses and amounts owned or due to them by the Company.

Not earlier than 15 days prior to making of application to Tribunal

10.

 

List of Documents to be filled along with the NCLT is given separately (Annexure-A)

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11.

 

 

Application to the Tribunal to confirm Reduction of Share Capital of a Company in Form No. RSC-1 along with fee as prescribed in the rules.  (Rs. 5000)

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12.

 

 

 

 

 

Application should be accompanied by the following:

(i) The list of Creditors duly certified by the Managing Director (where the Company has) or by two Directors,

(ii) Below mentioned are the Certificates and declarations to be taken from the Auditors and the Directors respectively. (Annexure-A)

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II. Companies actions on the Directions as given by the NCLT:
 

S.NO.

PARTICULARS

TIME PERIOD

(No. of Days)

1.

 

 

 

 

 

 

 

 

 

The Tribunal shall give notice or direct the Company to Give Notice to the following:

(i) To the Central Government of India in Form No. RSC-2,

 

(ii) To the Creditors of the Company in Form No. RSC-3, seeking their representations and objections if any.

 

 

Within 15 days from the submission of Application.

2.

 

 

 

The respective Notices to the Central Government and each Creditor should be sent along with the Scheme of Reduction of Capital.  

 7 days or such time period as may be prescribed by Tribunal.

3.

 

 

 

 

 

 

The Tribunal along with such directions as per the rules gives directions for the Notice to be published in Form No. RSC-4 in one leading English Newspaper and one leading Vernacular language Newspaper, both having wide circulation, in the state where the registered office of the Company is situated.

7 days from the date on which the direction was given by the Tribunal.

4.

 

 

 

Notice in Form No. RSC-4 shall state the proposed amount of reduction, the place for inspection of List of Creditors, and the days within which the Creditors can raise their objections.

--

5.

 

 

 

To upload the Notice along with the brief particulars of the Scheme of Reduction of Capital on the website of the Company (if any), and also the date of hearing.

--

6.

 

 

 

 

 

The authorized person to issue the Notices and publication of such notice in the Newspapers shall file an affidavit in Form No. RSC-5 confirming the dispatch and publication of such Notices.

Within 7 days from the date of issue of the Notice

7.

 

 

 

Company to file the objections (if any) received from the Creditors with the Tribunal.

Within 3 months from the date of publication of Notice in the Newspaper.

8.

 

 

 

 

 

The Tribunal if satisfied that the claims or debts of Creditors is discharged or secured by the Company, it may dispense with the requirement of giving of Notice to the Creditors for their objections (if any)

--

9.

 

 

 

Where the Tribunal is satisfied with the process of Reduction of Share Capital, it may pass an order confirming the Reduction of Share Capital and approving the minute in Form No. RSC-6.

--

10.

 

 

 

The Company shall file E Form INC-28 with the Registrar of Companies (ROC) along with the order copy (Form No. RSC-6) passed by the Tribunal.

Within 30 days from the date of the receipt of order copy

11.

 

 

Now a Certificate issued by the Registrar of Companies under Section 66(5) of the Companies Act, 2013 in Form No. RSC-7

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ANNEXURE- A
 
LIST OF DOCUMENTS REQUIRED TO BE FILLED ALONG WITH APPLICATION TO THE TRIBUNAL
 

S.NO.

PARTICULARS

 

 

 

 

 

 

 1. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) The proof of delivery of Notice of Extra-Ordinary General Meeting (EGM) (Acknowledgement receipts)

(ii) Proof of delivery of Notices which came back to the Company, or which are not delivered.

(iii) Copy of publication of Notice of EGM in the newspapers (One in English and one in Vernacular language newspaper having wide circulation)

(iv) Attendance sheet of EGM, being duly certified by the Directors of the Company.

(v) Certificate from the Auditor and declaration by the Director on the present Shareholding Pattern along with the percentage to the Paid-up Share Capital for each Shareholder. (Including Equity and Preference Shareholders)

(vi) Certificate from the Auditor and declaration by the Director on the number of Equity Shareholders who were present and voted in favour of the resolution, along with their number of shares held and percentage to the Paid-up Share Capital of the Company.

(vii) Certificate from the Auditor and declaration by the Director on the number of Equity Shareholders who were present and voted in against of the resolution, along with their number of shares held and percentage to the Paid-up Share Capital of the Company.

(viii) Certificate from the Auditor and declaration by the Director on the number of Equity Shareholders who were present, but not voted in the meeting, along with their number of shares held and percentage to the Paid-up Share Capital of the Company.

(ix) Certificate from the Auditor and declaration by the Director on the number of Equity Shareholders who were absent or not present in the meeting in which resolution was passed, along with their number of shares held and percentage to the Paid-up Share Capital of the Company.

(x) Certificate from the Auditor and declaration by the Director on the list of Preference Shareholders along with their percentage to the Paid-up Share Capital of the Company.

(xi) Certificate from the Auditor and declaration by the Director that the Company has taken consent, affidavits, and prior approval from the Preference Shareholders that their interest or dividend is not being affected in any manner.

(xii) Certificate from the Auditor verifying and certifying the list of Creditors. (Separate list for Secured and Unsecured Creditors along with their amounts owned or due to them by the Company)

(xiii) Certificate from the Auditor that the accounting Treatment proposed by the Company is true, fair and correct as per the Accounting Standards prescribed. (According to Section 133 of Companies Act, 2013)

(xiv)      Certificate from the Auditor and declaration by the Director that Company is not in any arrears or defaults in repayment of deposits or interest thereupon.

(xv)        Certificate from the Auditor and declaration by the Director, showing breakup of Share Capital i.es Authorized, issued, Subscribed, and Paid-up Share Capital (Including both Equity and Preference Shareholders)

 

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