Bengaluru Bench of NCLT imposes penalty for nondisclosure of secured creditors, mandates compliance with regulatory guidelines.
In a significant decision, the National Company Law Tribunal (NCLT), Bengaluru Bench, approved the reduction of share capital for M/s. Lifestyle International Private Limited, while emphasizing strict adherence to statutory provisions. The tribunal's approval, given on December 15, 2025, is contingent upon compliance with the Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) guidelines, and tax laws.
The petition filed by Lifestyle International sought to reduce its paid-up share capital by cancelling shares held by non-promoter shareholders. The proposal was approved via a special resolution passed in the company’s Extraordinary General Meeting (EGM) on October 31, 2023. The company's decision was driven by a surplus of idle funds and a strategic move to increase business flexibility by returning capital deemed excess to requirements.
The NCLT’s order, delivered by Shri Sunil Kumar Aggarwal, Member (Judicial), and Shri Radhakrishna Sreepada, Member (Technical), specified that the approval is subject to lifestyle International's compliance with all statutory guidelines. The tribunal highlighted discrepancies in the company's initial filings concerning secured creditors, noting a "casual approach" and imposing a penalty of Rs. 5,00,000. The penalty is to be deposited into the PM National Relief Fund and the CM Relief Fund, Karnataka, within four weeks.
The tribunal’s directive also included the publication of the order in specified newspapers within 30 days and stipulated that any payment resulting from the share reduction must comply with FEMA, RBI guidelines, and tax deductions at source.
The tribunal’s decision underscores the importance of regulatory compliance, emphasizing the need for corporate transparency and accountability in capital restructuring activities.
Bottom Line:
Reduction of share capital under Section 66 of the Companies Act, 2013 - Approval granted by NCLT subject to compliance with FEMA, RBI guidelines, and other statutory provisions - Penalty imposed for non-disclosure of secured creditors in initial filings.
Statutory provision(s): Section 66 of the Companies Act, 2013
M/s. Lifestyle International Private Limited, (NCLT)(Bengaluru Bench) : Law Finder Doc id # 2826988
