NCLAT Upholds Reliance Retail's Capital Reduction Amid Shareholder Appeal

In a significant relief to Reliance Retail, the National Company Law Appellate Tribunal (NCLAT) has dismissed a petition against the company's decision to reduce its equity share capital. The tribunal found that non-promoter shareholders were offered a fair value for their shares, with the decision receiving overwhelming support from the shareholders.

The move by Reliance Retail involved the reduction and cancellation of 78,65,423 equity shares, excluding those held by the promoters or holding company. The proposal, which was approved through a special resolution on July 4, 2023, was endorsed by 99.99% of shareholders, who received Rs 1,380 per share, a 56% premium over the fair value assessed by independent valuers.

Despite objections from a minority shareholder, the NCLAT upheld the decision, emphasizing that the process complied with the company’s Articles of Association and relevant legal provisions. The ruling underscores the majority's role in such corporate decisions, aligning with the principles of corporate governance.