NCLT Approves Piramal Fund Management's Capital Reduction Plan

Tribunal sanctions utilization of Securities Premium Account to offset losses, ensuring compliance with statutory requirements.

Mumbai, November 17, 2025 - The National Company Law Tribunal (NCLT), Mumbai Court-IV, has granted approval for the reduction of share capital for Piramal Fund Management Private Limited. The decision, made by Shri. Anil Raj Chellan and Shri. K. R. Saji Kumar, permits the utilization of the Securities Premium Account to offset the debit balance in the Profit and Loss Account, marking a significant step in the company's financial restructuring.

The Applicant Company filed a petition under Sections 66 and 52 of the Companies Act, 2013, seeking to leverage its Securities Premium Account to address the accumulated losses reflected in its Profit and Loss Account. This strategic move aims to present a fairer depiction of the company's financial position and streamline its balance sheet.

The tribunal's approval was contingent upon the assurance that the capital reduction would not adversely affect creditors and that all statutory requirements are met. Importantly, the tribunal clarified that the approval does not exempt the company from paying stamp duty, taxes, or other legal charges. Statutory authorities retain the right to initiate actions for any non-compliance.

The rationale for the reduction, as presented by the company's representative, revolves around the need to mitigate operating losses that have eroded the value represented by the company's share capital and securities premium account. By adjusting these accounts, Piramal Fund Management hopes to reflect a more accurate financial standing and prepare for a profitable future.

The company's petition also highlighted that the reduction would not compromise its ability to meet financial commitments or affect creditor settlements. The tribunal confirmed that the adjustment would solely affect reserves and surplus, with no payout to shareholders, thereby maintaining the company's overall net worth.

The company's issued, subscribed, and paid-up share capital remains unchanged post-reduction, ensuring no alteration in the shareholding pattern. Additionally, the company's statutory auditor and director affirmed that there were no arrears in deposit repayments or interest, further validating the company's financial integrity.

The Regional Director, Western Region, Ministry of Corporate Affairs, initially raised observations regarding the notices sent to creditors and potential tax implications. However, these concerns were satisfactorily addressed by the company through detailed affidavits and submissions.

Following the tribunal's confirmation, Piramal Fund Management is mandated to publish notices about the registration of the order in both English and Marathi newspapers within 30 days. This step ensures transparency and compliance with regulatory standards.

The tribunal's decision signifies a pivotal moment for Piramal Fund Management, allowing it to rejuvenate its financial structure and pave the way for future growth. The company now stands poised to optimize its operations and enhance its market presence, as it navigates the complexities of corporate finance.

Bottom Line:

Companies Act - Reduction of share capital and utilization of Securities Premium Account to offset debit balance in Profit and Loss Account - Approved by the Tribunal upon satisfaction that the reduction does not adversely affect creditors and complies with statutory requirements.

Statutory provision(s): Sections 66, 52 of the Companies Act, 2013; Rule 2 of the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016

Piramal Fund Management Private Limited, (NCLT)(Mumbai Court-IV) : Law Finder Doc Id # 2811663