RECKITT BENCKISER INDIA LTD Vs. STATE

JUDGEMENT

(1.) M/s. Reckitt Benckiser (India) Ltd. was incorporated under the Indian companies Act (for short the 'Act') on July 5, 1951 under the name and style of Reckitt and Colman of India Ltd. This name was changed to present name with effect from December 18, 2000 vide certificate of incorporation consequent to change of name No. NCR-CN-1982. The registered office of the company is in Delhi. The present authorised share capital of the company is Rs.35 crores. Its existing issued and paid-up share capital is Rs.32,91, 31,880/-. The company proposes to reduce its share capital to the extent of Rs.6,6335,760/- constituting about 20.15% of its issued and paid-up share capital and its reserves to the extent of about Rs.159,20,58,240/-. This petition is filed by the petitioner company under Sections 101-105 of the Companies Act (in short the 'Act'), inter alia, seeking reduction of this share capital.

(2.) It is stated in the petition that in February,' 2003 the equity shares of the company were mandatorily de-listed from the Stock Exchange in accordance with Regulation 21(3)(a) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Take Over) Regulation 1997 (hereinafter referred to as the 'SEBI Regulations'). The market value of the shares of the company, immediately prior to de-listing was Rs.247/-per share. Pursuant to directions received from the Stock Exchange in reaction to the mandatory de-listing of the company, Lancaster SL (for short 'Lancaster') made an exit offer to acquire shares of the company under Regulation 21 of the aforesaid SEBI Regulations. The said exit offer was opened on May 9, 2003 and was valid till May 18, 2003. Price of Rs.260/- per share was offered in the said exit offer. This fact is" stated to indicate the value of the shares at relevant time.

(3.) The Board of Directors of the company in its meeting held on 18th June 2004 passed a resolution of reduction of share capital, which was, of course, subject to prior approval of the shareholders to be sought at a General Body Meeting and also subject to confirmation of the proposed reduction and return of paid- up share capital by the Court. It was also resolved that an Extraordinary General Meeting of the shareholders be convened on July 21, 2004 to seek their approval. Notice dated 25th June 2004 long with an explanatory statement was sent to the shareholders intimating them that General Meeting had been convened on 21st July 2004 to consider and approve the proposed reduction of share capital. Separate class meetings were to be held for: (a) the shareholders of the company whose shareholding was proposed to be reduced; and (b) shareholders of the company whose shareholding was not proposed to be reduced.