NCLT authorizes the reverse stock split and reduction of the share capital of Simpson & Co
The National Company Law Tribunal (NCLT), Chennai, has authorized the consolidation of shares and reduction of the share capital of Simpson and Co. Accordingly, the paid-up shares of Rs 10 each in the share capital of the company will be consolidated into shares of participation. of Rs 2,500 each.
A bench composed of R Sucharitha, member (judicial) and Anil Kumar, member (technical) issued the order on July 13 on the basis of a request by the company filed with the Tribunal on November 27, 2019. The request was to approve the consolidation of the entire share of the authorized, issued, subscribed and paid up capital.
The bench also ordered the company to create a trust to deposit the fractional shares of the dissidents.
“We further that in order to safeguard the interest of the dissident shareholders, who do not offer the shares to the company for the cancellation of the shares held by them by accepting the price of Rs 14,680 per share, the petitioner company must facilitate the constitution of the trust, in which fractions of shares of dissident shareholders will be acquired for their benefit thus resulting from actions by an appropriate deed, delimiting the rights and rights of the beneficiaries and other ancillary or ancillary matters ”, a declared the order.
On September 25, 2019, the board of directors of the company approved the consolidation of its share capital into shares in an amount greater than that of its existing shares by increasing the par value of the capital shares from Rs 10 per share to 2 500 Rs per share.
This ensured that every 250 shares with a par value of Rs 10 held by a member are consolidated into 1 (one) share with a par value of Rs 2,500 each. The consideration to be paid for the shares has been set at Rs 14,860 per share.
Subsequently, the extraordinary general meeting of the company was held on November 7, 2019. At the meeting, 63 shareholders holding 73 38,864 shares with a par value of Rs 10 each were present in person or by proxy. . Of this number, 12 shareholders holding 73.28,255 shares representing 99.86 percent in value have approved and adopted the said special consolidation and reduction resolutions.
However, 47 shareholders holding 10,492 shares representing 0.14 percent voted against the said resolutions. The votes cast by four shareholders holding 117 shares were declared void. It was therefore submitted that the shareholders constituting 99.86 per cent, being the overwhelming majority, had approved the said resolutions.
The court dismissed the objections of the dissident shareholders who sought higher value and ruled in favor of the company.