Section 78 of the Companies Act, 1956 and Section 52 of the Companies Act, 2013 provide that the provisions relating to reduction of share capital of a company shall, except as provided therein, apply to reduction of the securities premium account as if it were the paid up share capital of the company. Accordingly, a company can reduce its share premium account in the same manner as if it were the paid up capital of the company, and that is what the Transferee Company is seeking to do in terms of Clause 17 of the Scheme. The Counsel for the Transferee Company further submits that it would be appropriate to point out that Section 100(1)(b) of the Companies Act, 1956 contemplates that a company may reduce its share capital (and, therefore, by extension, its securities premium account) by inter alia canceling any paid up capital (and, therefore, by extension, its securities premium account), which is lost or is unrepresented by available assets. The debit balance in the profit and loss account of the Transferee Company as well as the debit balance in the profit and loss account of the Transferor Company would represent capital that is lost and/or that is unrepresented by available assets. Accordingly, the reduction of the securities premium account of the Transferee Company, once approved by this Hon’ble Court, will continue to show a true and fair view of the affairs of the Transferee Company. The Counsel for the Petitioner Companies further submitted that the observation of the Regional Director is not relevant to what is being sought to be achieved in paragraph 17(b) of the Scheme.
