company registration

Company Share Capital Reduction- Procedures

The national law tribunal, it means the procedures for the reduction of the company share capital. It describes in section 66 of the Companies Act, 2013 and it publishes at the Gazette of India on December 15th, 2016. Identically, To reduce the share capital amount we have to make an application to the National Company Law Court (NCLT) under section 66. Additionally, The reduction of the capital amount limites by shares or limited guarantee and having a capital share after passing the application.

Share capital reduction involves modification in the memorandum of association of the particular company. Such types of reduction can be done in two ways. Either, we can turn off or reduce the liability or responsibility on the company’s share capital. The capital amount may be paid up or the available assets. Correspondingly, Reduction cannot do in the following cases like if the company carrying any arrears of deposit repayment or the due in the interest payable.

Company share capital reduction procedures | Corpstore

Provision of company share capital Form

Regarding Rule 2(1) an application to National Company Law tribunal to confirm the reduction of the share capital should be filled in Form No. RSC-1. Rule 2(2) specifies what are the mandatory documents and papers should submit with the applications. Particularly, It includes some sort of creditors’ class wise name and address. The rule does not contain any list as we mentioned above. Certainly, This list collection should not exceed more than 15 days of the actual application registration. There contain three different sets of certificates from the company’s auditor with respect to the list. Especially, These lists should be sanctioned by the managing director of the company as true and correct.

Company share capital Application Notice

The notice of registration application for the capital share reduction should be sent to the Central Government, concerned Registrar of the companies in for type RSC.2. Consequently, If the company is a listed one then the notice should be forward to the SEBI also. The central Government is passed on his power to the Regional directors at Mumbai, Kolkata, New Delhi, Chennai, Hyderabad, Ahmedabad, and Shillong under section 66(2) by notification No. S.O 2938(E) dated 06-09-2017. Accordingly, When corresponding notice also is given to the creditors in Form No. RSC-3 for getting their objections. The form also published in the newspaper in Form No.RSC-4. Obviously, To confirm the dispatch and publication of notice an affidavit in Form No.RSC-5 should file with NCLT.

The concerned fee for the reduction of share capital is 5000/-.

Company share capital Compromises, Arrangements, and Amalgamations on Rule, 2016

The Companies Compromises, Arrangements, and Amalgamations on Rule, 2016 describes in section 230 to 233 and section 235 to 240 of the companies, 2013. Ultimately, These rule and regulations publishes in the Gazette of India by Notification No. G.S.R. 1134. Section 230 of the company Act 2013 states that when a company registration arises the arrangement between the company and its members or any class of them or between a company and its creditors, the NCLT may on the application of the company, or the creditor or member get arises. The arrangements include reorganization of the company’s share capital. This is done by the association of shares of various classes. Definitely, It also contains another method named the division of shares into shares of various classes.


Rule 3(1) describes that the supplication should make to NCLT in form No.NCLT-1 along with a notice of admission and an affidavit in Form No.NCLT-6 and a copy of arrangement along with the concerned fee Rs.5000/-.

Joint Application

Rule 3(2) states if we want to register or file an application then more than one company is involving and such application may files as a joint application.

Issue of notice to the company share capital

The Rule 3(3) states if the company is not the applicant then the copy of the confirmation and the admission notice also submit base4d on the company upon its receiver not less than 14 days before the date fixed for the hearing of the admission.   

Disclosure to NCLT

Rule 3(4) provides that the applicant may disclose to NCLT in the application regarding which class of members identifies for the purpose of approval of the scheme.

Creditors Responsibility statement

Cases like a scheme of corporate responsibility rebuilding as provided in section 230(2) © (I) of the company Act, Rule 4 states the responsibility of the member defines in form No. CAA. 1 and it may include in the scheme of corporate duty measurement. Eventually, Corporate responsibility rebuilding means a special one that restructures the out structure of the company.

Directions of NCLT

Rule 5 states that on the time of admission of NCLT it gives directions towards the below lists:

Instantly, Determining the Classes of members whose meeting for the arrangement with the meeting for any classes of creditors in terms of subsection (9) of section 230.

Allocating the time and place for meeting and meetings.

Appointing a chairperson and scrutinize the detail of the meeting that was held, and fixing the terms of statements like his appointment and it including his wage.

Fixing the arrangements like voting the person regarding the name, proxy, machines, etc.

Presently, Determination of the priority of the member or the creditors of any class.

Notice to be given based on the meeting date or meetings.

The Notice to be given to sectoral officials or consultants under the section (5) of section 230.

Occasionally, Reporting time of the chairperson who wants to submit the result to the court based on the company incorporation meeting data.

These other types of matters are necessary for NCLT.

Meeting Notice of company share capital

When a meeting of a class or classes gets organizes and the meeting pursuant has been directed to send to NCLT as provided in subsection 3 of section 230 of the Act. Eventually, This notice should be forwarded to each of the creditors or members individually under Rule 6 of the Rules.

Advertisement of meeting notice

The advertisement for the noticed meeting should submit in Form No.CAA.2 in newspapers regarding Rule 7. In the case of listed companies, the advertisement should be placed on the website of the SEBI and the recognized stock exchange where the securities of the companies are listed one by one. When separate meetings or classes of members or creditors are held, then a joint advertisement for such meeting may get done.

Company share capital reduction procedures | Corpstore

Notice to legal authorities regarding company share capital

These notices are making under section 5 of section 230 of the Act and in a form CAA.3. It should be associates with a copy of the scheme of compromise or arrangement. The explanatory statement should be sent to the authorities mentioned in Rule 8(1) by registering post. If no representation is registers or receives within 30 days by NCLT from these authorities, it will get assumed that the authorities have no depiction to make on the proposed scheme of arrangement.


The person who gets the notice for voting may within one month from the date of receipt vote in the meeting either in person or through proxy or through postal ballot or through electronic machines to the adoption of the series of arrangements.


The voting can be done through a proxy. here, the proxy should be in an appropriate manner sign by the person who permits to attend and vote at the meeting is the registration of a company with no longer than 48 hours before the meeting as per the Rule 10.

Copy of arrangement may furnish by the company

Each and every creditor or member entitles to attend the meeting may furnish by the companies.

Affidavit of company share capital service

A confirmation as per the Rule 11 should file by the chairperson appoint for the meeting of the company and the notices of the seminar before NCLT not lesser than 7 days before the date fix for the assembly.

Meeting report by Chairperson

The chairperson of the meeting should be within the time fixation by NCLT or when no time has a fix within 3 days after the conclusion of the seminar. Here, the submission report to NCLT in form No.CAA.4 under rule 14.

Petition for conforming the arrangement

Rule 15 states that where the proposes agreement is confirmed by the members or creditors or both with or without modification, the company may within seven days of the report by the chairperson in form no. CAA.5.

Hearing Notice

Similarly, Once the NCLT fixes the date of report hearing, the notice of the hearing should be advertising in the same newspaper in which the notice of the meeting was advertised. Hence, Rule 16 states 10 days before the date fixed for the hearing.

Order on Petition

Where NCL sanctions the arrangement the order may include such directions in regard to any matter in the arrangement as NCLT may think it fit to make for the proper working of the compromise under Rule 17. 

Liberty on application

 Probably, The rule 23 provides that the company or any creditor or member in case of a company which is bounded on at any time after passing the order sanctioning the arrangement.

Company share capital reduction procedures | Corpstore


If you want to register your company without affecting the legal problems, you can reach out Corpstore the best business consultant services in Coimbatore. Accordingly, We also provide services like trademark registration, DSC services, and secretarial services.

You may also like...

Leave a Reply