The reduction of share capital can result in extinguishment of class of shares. Examine and explain the statement citing relevant provisions of laws.
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2017
The reduction of share capital can result in extinguishment of class of shares. Examine and explain the statement citing relevant provisions of laws.
Answer & Explanation:
In Siel Ltd., Re (2008) 144 Com Cases 469: (2009) 89 SCL 434 (Del) , a scheme of amalgamation and arrangement involved reduction of share capital by extinguishment of shares of a particular class. The reduction was approved by the majority of shareholders and creditors of the transferee company. The court, now NCLT approved the reduction and extinguishment of a portion of share capital was held to be permissible as no one was prejudicially affected.
Topics: Corporate Restructuring
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