Section 4D of The Small Industries Development Bank of India Act, 1989 in hindi
1[4D. Reduction of share capital.--(1) The Small Industries Bank may, with the prior approval of the Central Government, by a resolution passed in a general meeting of the shareholders, reduce its share capital in any way.
- (2)Without prejudice to the generality of the foregoing power, the share capital may be reduced by--
- (a)extinguishing or reducing the liability on any of its equity shares in respect of the share capital not paid-up;
- (b)either with or without extinguishing or reducing liability on any of its equity shares, cancelling any paid-up share capital which is lost, or is unrepresented by available assets; or
- (c)either with or without extinguishing or reducing liability on any of its equity shares, paying off any paid-up share capital which is in excess of the wants of the Small Industries Bank.
- (3)In any general meeting referred to in sub-section (1), the resolution for reduction of share capital shall be passed by shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if any, cast against the resolution by shareholders so entitled and voting.]
Summary
- The Bank is allowed to reduce its share capital in any way, provided it passes a resolution at a general meeting and gets prior approval from the Central Government.
- The Bank can reduce capital by canceling any paid-up capital that is considered lost or is no longer represented by available assets.
- The Bank can also return or pay off any paid-up share capital that is in excess of what the Bank currently needs to operate.
- The Bank can extinguish or reduce the liability on any equity shares for capital that shareholders have not yet paid.
- To successfully pass this reduction resolution at a general meeting, the votes cast in favor must be at least three times the number of votes cast against it.
Practical examples
FAQ
1. Does the Bank need permission from anyone outside the Bank to reduce its share capital?
Yes, it must obtain the prior approval of the Central Government.
2. How many votes are needed at the general meeting to reduce share capital?
The votes cast in favor of the resolution must be at least three times the number of votes cast against it.
3. Can the Bank cancel shares if the money is already lost?
Yes, it can cancel paid-up share capital that is lost or is unrepresented by available assets.
Test yourself
Q1.Under Section 4D of The Small Industries Development Bank of India Act, 1989, whose prior approval is mandatory before the Bank can reduce its share capital?
Q2.Under Section 4D of The Small Industries Development Bank of India Act, 1989, which of the following is a permitted method for the Bank to reduce its share capital?
Q3.Under Section 4D of The Small Industries Development Bank of India Act, 1989, what voting threshold is required at a general meeting to pass a resolution for the reduction of share capital?
Q4.Under Section 4D of The Small Industries Development Bank of India Act, 1989, a reduction of share capital requires a vote at a general meeting. According to Section 4E of the Act, how is the voting right of an equity shareholder determined on a poll during such a meeting?