NEW DELHI: A plea by Reckitt Benckiser (India) Ltd's shareholder challenging the firm's decision to reduce its share capital has been dismissed by the Delhi High Court on grounds of want of any infirmity in the decision of the firm, noted for products like Dettol and Strepsils.
A bench headed by Acting Chief Justice A K Sikri dismissed the plea of shareholder Chander Bhan Gandhi saying that it was bound by the law and there was no error in the approval granted to the scheme by the company judge.
"We are bound by the law and are unable to find any error in the legal reasoning given by the Learned Company Judge approving the action of the respondent company (Reckitt Benckiser (India) Ltd) of reducing the share capital," said the bench, which also included Justice Rajiv Sahai Endlaw.
Reckitt Benckiser (India) Ltd, last year, had reduced its share capital, including the shares held by the public, by 1.55 percent. The firm, however, had not reduced its shares, held by its UK-based promoter Reckitt Benckiser Plc, a multinational consumer firm.
The company bench of the high court had approved the firm's proposal to reduce its share capital, rejecting Gandhi's objections, prompting him to move the court's division bench against its order.
The reduction of share capital of a firm is decreasing company shareholders' equity through share cancellations and share repurchases. It is done by the companies for various purposes including for increasing shareholders' value and producing a more efficient capital structure.
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