Reduction of share capital

Confirmation of resolution of reduced share capital questions for consideration were, should the Court refuse its sanction to the reduction out of regard to the interest of those members of public who could be induced to take shares in the company; was reduction fair and equitable between different classes of shareholders; whether reduction was shared by all; and was it designed to work justly and equitably and whether it did not involve diminution of liability in respect of unpaid capital or payment of any shareholder of any paid up capital; and there was evidence regarding loss of capital and non-representation of available assets

None of such impediments existed

Proposed reduction in share capital, as resolved by petitioner company itself, was just, fair and reasonable

Such reduction was not likely to adversely affect interests of shareholders who had themselves resolved to approval of scheme of reduction

High Court confirmed proposal for reduction of share capital in terms of the requirements

Petition was allowed accordingly.

Extent and amount of reduction was a domestic matter and so long as there was no injustice to creditors or shareholders High Court was not concerned with precise amount of reduction of capital

All necessary formalities were complied with and Securities and Exchange Commission of Pakistan after checking and ensuring all necessary formalities filed a statement of no objection

No impediment was found to grant such permission as petitioner company had complied with all requisite formalities

High Court approved resolution passed for capital restructuring through reduction of share capital

Petition was allowed.

Appellant company filed Form-A and Form-26, stating paid-up capital of the company as Rs.10 million divided into 100,000 shares of Rs.100 each

Company submitted an application stating that paid-up capital was incorrectly mentioned due to typing error and company's paid-up capital actually of Rs.10,000 constituting 100 shares of Rs.100 each

Company requested the Commission to rectify the mistake of paid-up capital

Request of the company was not accepted on the ground that it being matter of reduction of paid-up capital, same fell under jurisdiction of High Court in terms of Ss.96 & 97 of the Companies Ordinance, 1984

Contention of the company was that it was a typing mistake and not a matter of reduction of capital

Validity

Effect of rectification sought by the company, would be reduction of capital, and the power to reduce the capital, rested with the High Court

Alteration in memorandum could only be done in respect of the objects of the company stated in S.21(1)(a) to (g) of Companies Ordinance, 1984, which did not include alteration in the share capital of the company

Remedy had clearly been provided in Ss.96 & 97 of the Companies Ordinance, 1984, whereby the High Court had the exclusive jurisdiction in the matter.