Minosha’s small investors move NCLAT

livemint.com:

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.