Section 66 of CA 2013 : Section 66: Reduction Of Share Capital

Explanation using Example

Imagine a company named 'Tech Innovations Ltd.', which is limited by shares, has been facing financial difficulties and realizes that its paid-up share capital is more than what is needed for its current operations. To streamline its capital structure and improve its financial health, the company decides to reduce its share capital.

The company passes a special resolution to reduce its share capital. However, before implementing the reduction, 'Tech Innovations Ltd.' must seek confirmation from the National Company Law Tribunal (NCLT), as per Section 66 of the Companies Act, 2013.

The company files an application with the NCLT, which then notifies the Central Government, Registrar, and SEBI (since 'Tech Innovations Ltd.' is a listed company), as well as the company's creditors about the proposed reduction. The NCLT considers any objections or representations made within three months.

After ensuring that the company is not in arrears of any deposits or interest thereon, and that the rights of the creditors are protected (either through discharge, determination, securing of the debts, or obtaining consent), the NCLT confirms the reduction of share capital. The company then publishes the order as directed by the NCLT and files a certified copy with the Registrar, who issues a certificate of registration for the reduction.

'Tech Innovations Ltd.' successfully reduces its share capital, which helps it stabilize its financial position and continue its operations more effectively.