Ch. Mohd. Sharief Tariq, Member - (1.) This is an Application that has been filed under Second Proviso to Section 14(1)(b) of the Companies Act, 2013 and the same has been numbered as C.P. No. 5 of 2017, wherein it has been prayed that the applicant company is a public company and the same be allowed to change its status from public to private company. At this juncture, there are three objectors. First Objector Mr. N. Sivaprasad has filed his objections stating that the 'consolidation of shares' which has happened during February 2016 is not in accordance with the law and the shareholders who are having less stakes have been paid and thrown out of the company and if the application of the company for conversion is allowed that would violate the rights of the Objector who has already been paid by the company as per the scheme of consolidation of shares and presently he is not a shareholder. He further submitted that when the status of the company is changed, then the applicable provisions of the Companies Act, 2013 would be different and the company would enjoy some privileges and exemptions. This in turn will result in creating hardship to the small investors who have already been paid by the applicant company. Second Objector Mr. Sithiraianandam vehemently opposed the proposed conversion of the applicant company from public to private, stating that the company under the guise of scheme of consolidation of shares is getting the conversion of the company from public to private and ultimately that would violate the rights of the shareholders, but he could not explain as to how the rights of the shareholders would get violated. The Objector has already been paid by the company under the scheme of consolidation of shares and presently he is not a shareholder. Third Objector is a Trust called "Dr. MAM Ramasamy Chettiar of Chettinad Charitable Trust" who has raised a different issue that on 2nd of May 2016, the Applicant company has issued 'rights issue' wherein there was no participation by the Trust, because it has not been given any opportunity for the same. However, during the previous hearing, the Applicant company has been asked to make an arrangement for the Trust so that the Trust could be in a position to get its due proportionate share in the 'rights issue'. The company has come with an arrangement by filing an affidavit stating that it is open to provide protection to the Trust in relation to the 'rights issue' provided the Trust is willing to deposit the money equivalent to the proportion of its shares to get the 'rights issue' to the tune of Rs. 102.24 crores provided the probate of Will is granted by the Hon'ble High Court of Madras in relation to the estate of Dr. MAM Ramasamy (deceased). The probate of Will would make the Trust entitled to get its name entered in the Register of the Members of company to the extent of 71 equity shares with all consequential benefits. Therefore, the Trust is at liberty to decide the course of action as proposed by the Applicant Company.
(2.) However, the Objectors have not been in a position to explain as to how the interest of the company would be prejudiced if the application of the company is allowed for conversion of its status to private limited. The Objectors could not offer reasons to show that the application for conversion is being made with a view to contravene or to avoid the compliance with any of the provisions of the Companies Act, 2013. The only issue that has been raised by the First and the Third Objectors is that against the "scheme of consolidation of shares" a suit has been filed and a matter pertaining to probate of Will pending before the Hon'ble High Court of Madras under O.S. No. 584 of 2016 and C.S. No. 492 of 2016 respectively, is not a sufficient ground to reject the present application of the company. The objections raised by the objectors are devoid of merits and therefore, stand rejected.
(3.) The perusal of the company application shows that M/s. Chettinad Cement Corporation Ltd. is a public limited company incorporated under the provisions of the Companies Act, 1956 having CIN: U93090TN1962PLC004947 and its registered office at "Rani Seethai Mahal Building", 603, Anna Salai, Chennai-600006, Tamil Nadu. The authorised share capital of the company is Rs. 500 crores divided into 25,000 equity shares of nominal value of Rs. 2,00,000/- each. The issued, subscribed and paid up capital is Rs. 44,08,00,000/- divided into 2204 shares of nominal value of Rs. 2,00,000/- each. It is made clear by the Applicant company that, in order to meet the pressing financial needs for further investing into the business, the company has resorted to "rights issue" for raising funds to the tune of Rs. 421.96 crores, that has been completed on 2.5.2016.;