Delhi High Court upholds rejection of Reebok India's conversion to Limited Liability Company
Delhi High Court has upheld the Registrar of Companies’ order that rejected conversion of Reebok India Company from an “Unlimited Liability Company" to a "Limited Liability Company".
Dismissing Reebok India's petition, Justice Subramonium Prasad said that the reasons given by the RoC in rejecting the Reebok’s application on the ground that various prosecutions have been filed by the Serious Fraud Investigation Office against it for offences under the Companies Act and the Indian Penal Code cannot said to be so perverse, especially keeping in mind the interest of shareholders and the interest of creditors.
«The anxiety on the part of the RoC that the creditors and stakeholder should not be left high and dry cannot be said to be completely unjustified,» Justice Prasad said.
“The registrar was also not provided with an NoC or undertaking from all the shareholders to support the conversion application and the petitioner(Reebok) did not even issue a public advertisement inviting objections from various creditors/stakeholders on the issue of conversion,” the HC said.
The RoC had also observed that Reebok suffered substantial financial losses and had a net deficit in current liabilities over the assets in excess of Rs 2100 crore. The registrar was also not provided with a no-objection certificate or undertaking from all the shareholders to support the application for conversion and Reebok did not even issue a public advertisement inviting objections from various creditors or stakeholders on the issue of conversion, the
