In re Fairfield Atlas Limited (NCLT Mumbai)
The National Company Law Tribunal (NCLT) considered a petition filed by Fairfield Atlas Limited seeking confirmation of a special resolution passed by its equity shareholders for reduction of its issued, subscribed and paid-up equity share capital under Section 66 of the Companies Act, 2013. The petition proposed reducing the company’s paid-up equity share capital from 2,73,20,540 fully paid equity shares of ₹10 each to 2,68,75,121 fully paid equity shares of ₹10 each by cancelling and extinguishing 4,45,419 equity shares held by public shareholders. The company proposed debiting the equity share capital account to the extent of the face value of the cancelled shares and charging the difference between the face value and consideration to retained earnings under reserves and surplus. The special resolution approving the reduction was passed at the Extraordinary General Meeting held on 10 May 2021.
The petitioner stated that its equity shares had been delisted, resulting in the absence of any trading platform for public shareholders. According to the petition, public shareholders were unable to liquidate their investments because the shares were no longer tradable through stock exchanges. The proposed selective reduction was intended to provide public shareholders with an opportunity to exit at a fair and equitable price while reducing the administrative costs associated with servicing a small percentage of shareholding held by a large number of public shareholders located across India and overseas.
