Section 58 : Procedures for obtaining approval of Court to reduce share capital

2) Where a petition is made pursuant to Sub-section (1), the concerned company shall, prior to the hearing of such petition, publish a public notice in a daily newspaper of national circulation for at least three times, setting out the venue and date of hearing on the reduction of share capital of the company.

3) Every person who is entitled to any debt or claim under the prevailing law at the time of commencement of the winding up or insolvency of a company shall be entitled to submit his claim and objection to the reduction of share capital of the company.

4) The director or company secretary of a company shall , as ordered by the Court, submit to the Court a real and true list of creditors of the company, if any, setting out, inter alias, their names, addresses and amount of debt repayable to each of them, at the commencement of hearing of the petition for reducing the capital of the company.

5) Irrespective of whether the creditors whose debts are yet to be discharged or determined, out of the creditors whose names are entered on the list submitted pursuant to Sub-section(4), do or do not consent to the reduction of capital in the case where the company admits the full amount of the debts or claims made by the creditors, or though not admitting it, agrees to make provision of moneys required to pay such amount and makes required provision for the same by executing a bond undertaking to pay the full amount within a certain date, then the Court may issue order confirming the reduction of the share capital .

6) In taking action for approval on a proposed reduction of share capital which involves either the diminution of any liability in respect of unpaid share capital or the paying back to an shareholder of any amount paid for shares, the Court may, if, having regard to the circumstances and available evidence, it thinks proper so to do, direct that the provisions of Sub-section (3) or (4) shall not apply to any specific creditor.

7) If the list of creditors submitted pursuant to subsection (4) is found to contain any false statement or omission, the director of the company who submits such list and the officer who signs such list shall be liable to punishment under this Act.

Provided, however, that if the officer who signs such list proves that any omission or mistake was made without his/her knowledge or immediately when he/she knew such omission or mistake, he gave information to the Court for the rectification of such omission or mistake, prior to the making of an order by the Court under this Section or he exercised all reasonable care to avoid such omission or mistake, he shall not be liable to that punishment.

8) If the Court is satisfied, with respect to the creditors who under Sub-section (1) are entitled to object to the resolution on reduction of capital, that either their consent to the reduction has been obtained or their debts or claim have been discharged or have been determined and are at the state of discharge, or have been secured, it may make an order confirming the reduction, specifying appropriate alters and conditions.

9) Where the Court makes an order pursuant to Sub-section (8), it may, if it thinks proper so to do, order directing that the concerned company, of which resolution to reduce capital has been co confirmed, shall, for a specified periods, add to its names the last words thereof the words “ capital reduced” and publish necessary notice with a view to giving information to the general public about the reasons and causes for such reduction and other important information in regard thereto .

10) Where, pursuant to Sub-section (9) , a company is ordered to add to its name the words “capital reduced” ,those words shall, until the expiration of the period specified by the Court ,be deemed to be an integral part of the name of the company.

11) The contents of the terms contained in an order issued by the Court, pursuant to this Section, in the course of confirming a resolution for the reduction of capital shall be deemed to have ipso facto been incorporated in the memorandum of association and articles of association of the company; and the memorandum of association and articles of association shall be deemed to have been amended to that extent.

12) Any director who knowingly conceals, hides or holds back the name of any creditor who, under this Section, is entitled to object to the resolution for reducing capital or knowingly prepares or submits a false statement on the amount of loan or clam or liability or conceals, hides or holds back such loan or liability or prepares or causes to prepare a false statement or any officer or employee of the company who abets to such act shall be liable to punishment under this Act.

13) Where the share capital of a company is reduced pursuant to this Section, the director or company secretary of that company shall mention and authenticate that matter in each share certificate issued by such company.