Hyderabad Bench Confirms Reduction of Share Capital Following Compliance with Section 66 of Companies Act, 2013
The National Company Law Tribunal (NCLT), Hyderabad Bench, has given its nod to the reduction of share capital for M/s Kalburgi Cement Private Limited, as per Section 66 of the Companies Act, 2013. The judgment was delivered on December 19, 2025, by Sri Rajeev Bhardwaj, Member (Judicial), and Sri Sanjay Puri, Member (Technical), after a thorough review of the company's petition and compliance with statutory provisions.
Kalburgi Cement, formerly known as Vicat Sagar Cement Private Limited, proposed to adjust its amalgamation deficit of Rs.213.41 crore against its securities premium account as part of the capital reduction scheme. This move aimed to enhance the financial presentation and stakeholder value of the company. The decision was ratified during an Extraordinary General Meeting held on May 16, 2025, where the resolution received unanimous support from the company's shareholders.
The tribunal's judgment underscored the domestic nature of share capital reduction, asserting that it should primarily be a concern of the company itself, subject to shareholder approval. The tribunal emphasized that such reductions should be confirmed unless objections arise from creditors or if the transaction is deemed unfair or inequitable.
The petition faced scrutiny from several regulatory bodies, including the Regional Director, Ministry of Corporate Affairs, and the Income Tax Department, both of which initially raised concerns regarding unsecured creditors and outstanding TDS demands. However, Kalburgi Cement successfully addressed these issues, affirming that notices were served to all unsecured creditors and statutory authorities, and no objections were received.
The tribunal directed Kalburgi Cement to publish notices of the order and file certified copies with the Registrar of Companies within stipulated timelines. Additionally, all regulatory authorities are instructed to act upon the certified order.
The judgment reinforces the procedure for share capital reduction as outlined under Section 66 of the Companies Act, 2013, ensuring fair and equitable corporate governance practices. Kalburgi Cement's compliance with statutory requirements was pivotal in the tribunal's decision to approve the capital reduction, underscoring the importance of transparency and diligence in corporate restructuring processes.
Bottom Line:
Reduction of Share Capital under Section 66 of the Companies Act, 2013 - Reduction of share capital is a domestic concern of the company and if approved by a majority of shareholders, the Tribunal will confirm it, except in situations like unfair or inequitable transactions or objections by creditors.
Statutory provision(s): Companies Act, 2013 Section 66
