ORDER
Per: Kishore Vemulapalli, Member (Judicial)
1. This bench is convened by video conference.
2. This Petition has been filed under Section 55(3) of the Companies Act, 2013 by HSBC Securities and Capital Markets (India) Private Limited seeking permission of this Tribunal for issue of 25,00,000 9% Redeemable Preference Shares of
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Rs. 100 each for a redemption period of 20 years in lieu of old 25,00,000 9% Redeemable Preference Shares due for redemption on 12 March 2021. Facts of the case:
3. The Petitioner Company had allotted 9% 25,00,000 Redeemable Preference Shares on 12 March 2001 to HSBC Investment Bank Holdings BV ("HIBV"), due for redemption on or before 12 March 2021 subject to following terms and conditions;
a) 9% Redeemable Preference Shares of Rs. 100 each were issued at pari passu;
b) The said Preference Shares carry dividend at the rate of 9% per annum.
c) Preference Shares to be redeemed at par.
4. Due to the absence of adequate accumulated profits, the Petitioner Company was not in a position to redeem these shares. Accordingly, the Board of Directors of the Petitioner Company decided to issue new 9% Redeemable Preference Shares of Rs. 100 each for redemption period of 20 years in lieu of 25,00,000 9% Redeemable Preference Shares, due for redemption on or before 12 March 2021, on the same terms and conditions as were applicable to the preference shares due for redemption.
5. Section 55(3) of the Companies Act, 2013 provides that "Where a company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further redeemable preference shares equal to the amount due, including the
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dividend thereon, in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed preference shares shall be deemed to have been redeemed:
Provided that the Tribunal shall, while giving approval under this sub-section, order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares".
6. The Counsel for the Petitioner Company states that the Board of Directors in their meeting held on 10 February 2021 and Members in their Extra-ordinary General Meeting held on 11 February 2021 have approved of such further issue of Redeemable Preference Shares in lieu of the old Preference Shares.
7. The Petitioner Company has received Consent Letter/NOC from HIBV which is holding 100% Preference share of the Petitioner Company, due for redemption, for issuing fresh/new 25,00,000 9% Redeemable Preference Shares in lieu of old Preference Shares.
8. In the above stated circumstances, this Bench is of an opinion that this Petition squarely falls under Section 55(3) of the Companies Act, 2013, therefore, this Tribunal hereby approve further issuance of 25,00,000 9% Redeemable Preference Shares of Rs. 100 each for a redemption period of 20 years in lieu of old 25,00,000 9% Redeemable Preference Shares on the same terms and conditions drawn in the past.
9. Accordingly, this Company Petition is hereby allowed. Sd/- Sd/-
PRABHAT KUMAR KISHORE VEMULAPALLI
Member (Technical) Member (Judicial) /NP/
24/02/2023
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