NCLT permits Josco Jewelers to reduce its authorized share capital

NCLT permits Josco Jewelers to reduce its authorized share capital

The Kochi Bench of the National Company Law Tribunal (NCLT) has allowed Josco Jewellers to drastically cut down on its paid up share capital from Rs. 120 crore to Rs. 1 crore.

M/s Josco Jewelers Private Limited (company) arrived at the decision to reduce the its share capital following the transfer of the jewellery retail business to Josco Bullion Traders Private Limited.

The Board of Directors of Josco Jewellers Private Limited reviewed the capital structure and deemed that the company's paid up capital was more than the what was required for the existing business of the company.

Josco Jewelers which is a jewellery Group engaged in the business of dealing with all classes and kinds of gold ornaments, gold bars, sovereign, jewels made out of white gold, platinum, silver, diamond stones, pearls, and allied products approached the NCLT through a petition for the reduction of capital filed under Section 66 of the Companies Act.

The company proposed to cut down the share capital according to the Articles of Association (AoA) of the Company read with Article 5 of the AoA empowers the Company for reducing the share capital and to divide it according to the provisions of the Companies Act, 1956.

The company stated that the proposed reduction shall be beneficial for the shareholders and all the stakeholders concerned as a whole. The Company has not accepted any deposits and has no secured/unsecured creditors as on 31 October 2019.

It was also stated that a certificate from the Auditor and declaration from the Directors of the Company along with the provisional financial statements as of 31 October 2019 have been produced before the NCLT.

According to clause 5 the Authorized Share Capital of the Company is Rs. 120,00,00,000 divided into 1,20,00,000/- Equity Shares of Rs. 100 each, which have been issued and have been fully paid-up or credited as fully paid.

The Company stated that the proposed reduction of share capital has no adverse impact on the employees as no employees are working on the rolls of the Company as on 31 October 2019 and the tax implication arising out of such reduction of share is subject to the final decision of the Income Tax Authorities.

The matter was listed before the NCLT consisted of Judicial Member, Ashok Kumar Borah and it allowed the petition of the company by issuing certain directions to it.

The NCLT directed the concerned regulatory authorities to act on the certified copy of the order. It directed the Company to file the order with the Registrar of Companies within 30 days from the date of the receipt of the order.

The company was directed to publish notices about registration of order and minutes of reduction by the concerned Registrar of Companies, Kerala, in two newspapers, namely 'Indian Express' in English and 'Mathruboomi' in Malayalam, both having circulation in Kerala, within 30 days of registration.