NCLT Ahmedabad: Reduction Of Share Capital Does Not Exempt Company From Fulfilling Other Statutory Obligations

NCLT Ahmedabad Approves Capital Reduction for Mahan Industries

The National Company Law Tribunal (NCLT), Ahmedabad bench, comprising Dr. V.G. Venkata Chalapathy (Member Technical) and Chitra Hankare (Member Judicial), has approved a Section 66 application under the Companies Act, 2013, filed by Mahan Industries Limited. The application sought confirmation for the reduction of the company's share capital.

Mahan Industries filed the application under Section 66 of the Companies Act, 2013, to reduce its share capital and eliminate accumulated losses. The company, as outlined in its Memorandum of Association (MOA), operates in trading, investment, and financial services.

As of December 20, 2022, the company’s authorized capital stood at ₹37.3 crores, while its issued, subscribed, and paid-up share capital amounted to ₹36 crores. The application proposed to offset accumulated losses of ₹33.61 crores to restructure its financial health effectively.

This restructuring decision was approved through a special resolution passed during the Extraordinary General Meeting (EGM) on September 21, 2021. The objective of the capital reduction is to clean the company’s balance sheet, improve its financial position, and attract potential investments.

Notably, the Regional Director, Registrar of Companies, and the Income Tax Department raised no objections, confirming that the reduction would not impact creditors, as the company has sufficient assets to meet its liabilities.

The NCLT approved Mahan Industries’ application, stating that the proposed reduction complies with applicable laws. It also acknowledged the absence of objections from the Regional Director, Registrar of Companies, or the Income Tax Department.

The tribunal clarified that the approval does not exempt the company from its statutory obligations, including the payment of taxes, stamp duties, or compliance with regulations under SEBI, FEMA, and income tax laws. The company has been directed to register the approved minutes as per Section 66(5) of the Companies Act, 2013.