Minority shareholders of Minosha India Ltd have approached the New Delhi bench of National Company Law Appellate Tribunal (NCLAT), accusing the company of unjustly expelling them by way of the capital reduction scheme.
Minosha (formerly Ricoh India) was admitted into insolvency by the National Company Law Tribunal (NCLT) in 2018. As a part of the corporate insolvency resolution process, it was acquired by Kalpraj D Dharamshi and Rekha Jhunjhunwala in 2019.
Central to its resolution plan was the condition of delisting the equity shares and reorganizing the share capital, which was executed successfully.
“Following delisting, there was no trading platform for the shareholders. The firm could have provided exit to the public shareholders by a scheme of buying back shares, in which case, public shareholders willing to exit would have surrendered their shareholding, and those not willing, could continue as shareholders,” Manisha Narang, partner, Perfect Accounting, said.
However, Narang, who represents minority shareholders said the company followed the tribunal-approved process of capital reduction.
Capital reduction happens when a company reduces the amount of its share capital, via payments to shareholders, or by cancelling some shares.
In this case, Minosha moved NCLT last October to reduce its capital to ₹45.3 crore, from ₹47.9 crore, and proposed that 5.38% of its share capital will be diluted in the process.
In its plea before the NCLT, Minosha had submitted that the capital reduction will give an opportunity to its public shareholders to exit at a fair valuation, as the equity shares held by them were otherwise not tradeable since the delisting of the shares in 2019.
This was, however, opposed by minority shareholders Narendra Singhania and Shubham Singhania as well as some of its creditors. While opposing the capital reduction process, the minority shareholders sought directions to allow them to opt for either exiting the company or remaining invested.
“It is just an equitable that the petitioner company (Minosha) be allowed to reduce its capital and transfer part of the property as envisaged in the proposed reduction,” a bench led by Justices Kuldip Kumar Kareer and Anuradha Bhatia of Mumbai NCLT had said on 19 May.
Aggrieved by the NCLT order, shareholders moved the appellate court, alleging that they were not given an option but were forced to exit by the 94.62% shareholders belonging to the promoter group.
“The proposed reduction is discriminatory, unfair and mal fide and is aimed at extinguishing the class of public shareholders,” the shareholders said in a petition.
They added it was imperative to hold a separate meeting of non-promoters and public shareholders where minority shareholders would have got an opportunity to assent or dissent on the capital reduction scheme.
Narendra Singhania and Shubham Singhania said they had invested ₹27 lakh and ₹74.33 lakh, respectively, but the capital reduction scheme is forcing them to exit their investments for ₹12.32 lakh and ₹24.64 lakh.
“The majority shareholders cannot squeeze out minority shareholders compulsorily and without having a say in the matter, and the company ought to have given an option to the unwilling dissenting shareholders of the company who chose to retain their shareholding in the company.”, the shareholders said.
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Updated: 04 Aug 2023, 12:39 AM IST