Venture Global Engineering v. Satyam Computer Services Ltd.
- 2022-02-17
Citation: (2015) 125 CLA 77 Bom
Facts: Cadbury India convened an Extraordinary General Meeting in November 2009 and passed a special resolution for the reduction of share capital under Section 100, Companies Act 1956. A petition was filed in December 2009 before the High Court of Bombay seeking approval for a scheme of reduction of share capital. As on 14 December 2009, the Cadbury Group held 97.583% of the equity share capital in Cadbury India.
Issue: How to determine a fair method of valuation?
Judgement: The Bombay High Court set out the principles a court should take into account while determining if selective reduction of share capital is fair, and the new framework appears to have taken these principles into account. The Cadbury principles emphasise the importance of ensuring fair valuation, including by reference to the rate at which past offers were effected, as provided for in the present rules with the requirement to provide in the application the highest price at which shares had been acquired in the past 12 months.
The framework provided by the newly introduced provisions is minimal. The emphasis is evidently primarily on the aspect of valuation. The provisions lend some guidance on specific factors and parameters that the valuation report must take into account to arrive at the fair price of shares, namely-
