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2023 Supreme(Online)(NCLT) 2605
NATIONAL COMPANY LAW TRIBUNAL
T. Krishnavalli, Manoj Kumar Dubey, JJ
SOMERSET THERAPEUTICS LIMITED VS
C.P. No.114/BB/2022
For the Appellants/Petitioners: Shri C.K. Nandakumar, Sr. Adv., Shri Shyam Sundar H.V., Adv.
For the Respondents: Ms. Simren D. Costa, Adv.
The Tribunal endorsed the consolidation of share capital under Section 61 of the Companies Act, 2013, emphasizing adherence to procedural requirements and the validity of shareholder resolutions supported by overwhelming majorities.
Headnote:(A) Companies Act, 2013 - Section 61 - National Company Law Tribunal Rules, 2016 - Approval for consolidation of share capital - The Tribunal granted approval for the consolidation of equity share capital from Rs.10 to Rs.10,00,000 each, based on a special resolution supported by 99.94% of shareholders. The consolidation enhances liquidity and simplifies shareholder management. The Tribunal also approved necessary amendments to the Memorandum of Association. (Paras 6, 8, 11, 12)
(B) Legal Framework - Petitioner complied with procedural requirements under Section 61 and Rule 71 regarding necessary approvals and notice to stakeholders, ensuring no dissenting objections were raised. (Paras 2, 3, 4)
Facts of the case:
The Petitioner, incorporated in 1990, sought to consolidate its share capital following delisting to enhance marketability and reduce administrative burdens. (Paras 2-6)
Findings of Court:
The Petitioner followed due process in obtaining shareholder approval and compliance with regulatory requirements for the proposed capital consolidation. (Paras 4-8)
Issues: The key issues included determining the validity of shareholder resolutions and the necessity of creditor approvals. (Paras 6, 7)
Ratio Decidendi: The Tribunal maintained that a company may consolidate its share capital without creditor consent as long as creditors' rights remain intact and without affecting company liabilities. (Paras 8, 11)
Result: Application granted with the Tribunal approving the consolidation and amendments.
ORDER
Per: Manoj Kumar Dubey, Member (Technical)
1. This Petition has been filed by M/s. Somerset Therapeutics Limited u/s 61 of the Companies Act, 2013 read with Rule 71 of the National Company Law Tribunal Rules, 2016 seeking the following reliefs:
(i) That the consolidation of equity share capital resolved pursuant to the special resolution set out in paragraph IV (23) above be approved;
(ii) That the change in the memorandum of association of the Petitioner Company with regard to the authorized share capital by substituting the existing Clause V, as approved by the (i) Board of Directors of the Petitioner Company vide resolution dated May 06, 2022; and (ii) shareholders of the Petitioner Company vide resolution dated June 11, 2022, be approved;
(iii) That to this end, all enquiries and directions necessary and proper be made and given; and (iv) That such further or other orders be made as the Hon’ble Tribunal shall deem fit in the interest of justice and equity.
2. Brief facts of the case as stated by the Petitioner are as under:
(1) The Petitioner Company, namely, M/s. Somerset Therapeutics Limited (hereinafter referred as the ‘Petitioner/Company’) was initially incorporated on 23.08.1990 under the name and style of Recon Pharma Private Limited under the Companies Act, 1956. Subsequently, on 05.03.1993, Petitioner Company was converted into a public limited Company and was known as Recon Pharma Limited. Thereafter, on 10.07.2000, the name of Petitioner was changed to Wintac Limited. Pursuant to delisting of equity shares of the Petitioner Company, on 08.12.2021, the name of the Petitioner Company has been changed to its present name being Somerset Therapeutics Ltd., with its registered office as stated above. Copy of the Board Resolution dated 17.06.2022 authorising Shri B.P. Thyagaraj, Vice President – Finance &Secretary to file the instant CP is annexed as Annexure-G of the Petition.
(2) The Share Capital of the Petitioner Company as on 13.06.2022 is as under:
| Share Capital | Amount (INR) |
| Authorized Share Capital | |
| 2,40,00,000 Equity Shares of Rs.10/- each | 24,00,00,000 |
| 10,00,000 Preference Shares of Rs.10/- each | 1,00,00,000 |
| Total | 25,00,00,000 |
| Issued, Subscribed and Paid-up Share Capital | |
| 1,00,24,242 Equity Shares of Rs.10/- each | 10,02,42,420 |
| Total | 10,02,42,420 |
It is stated that subsequently there has been no change in the Share Capital till the date of filing this Petition.
(3) The main objects of the Petitioner Company inter alia are to take over as a going concern the business of manufacture of drugs, intermediaries, formulated drugs, chemicals and cosmetics presently carried on by the partnership from Recon Pharma together with all its assets, liabilities and facilities such as licenses, power and telephone enjoyed by the said concern and to continue to carry on the business of manufacture of drugs, chemicals and cosmetics carried on by the said firm, etc.
(4) Article 18 of the Articles of Association of the Petitioner Company empowers the Petitioner Company to consolidate and divide all or any of its share capital into shares of larger amounts of its existing shares.
(5) The circumstances which justify the consolidation of equity share capital are that the Equity Shares of the Petitioner Company were voluntarily delisted from the Bombay Stock Exchange Ltd. with effect from 28.12.2020 through exit offer given by the Company through its Promoter viz., Veego Pharma, LLC and the exit offer was concluded on 28.12.2021. In view of the same, the shareholding continuing with the remaining shareholders of Petitioner has ceased to be marketable. Since the Equity Shares are not traded at the Stock Exchange, it is difficult for such Members to find buyers for their shares in their Company as the shares have lost liquidity/marketability because the remaining shareholders have to find out buyers for their equity shares and neither buyer nor seller have reference of fair price / value per equity share at which they may buy or sell the shares.
(6) Therefore, t
