P.P.ZIBI JOSE M.COM., MBA, M.A (Pol.), M.A (Pub.Admn.), FCS. LL.B., PRACTISING COMPANY SECRETARY 6112939, TENRdSE SRM ROAD KOCHr - 682018 PHONE: 2401685 :2401684 Mob:9388603877
EMAIL:
[email protected]' tenrosekochi@gmail. com Date:24.03.2018
To,
!'
Registrar of Companies E Wing, 2no Floor Kendriya Sadana Kormangala Bangalore - 560034
Sub: EGM dated 14th April 2018 Reg: Chembra Peak Estates Ltd
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Increase in Face value of share from Rs.10/- to Rs.60550/-
CIN U70100KA1970P1C001976
With reference to the above, I wish to submit that the Company has proposed consolidation of share capital of the company by increasing the face value of the Company's share which is at present Rs.10/- to Rs.60550/- by calling an EGM on 14.04.2018 . A copy of ,the EGM notice is enclosed herewith. The proposed consolidation of share capital is in violation of the Companies Act,2013, prejudicial to the interest of the Company, non-promoter shareholders including shares held by Government of India through IEPF. Further the proposal also violates Article 19 & 31, Right to Property guaranteed to all persons under the Constitution of India.
The resolution proposed is under section 61 of the Companies Act, 2013 which envisages consolidation of Capital of Share Capital into shares of a larger amount than its existing shares. Although the resolution proposed is under section 61 the net effect of the proposed resolution is compulsory acquisition of shares held by non promoter share holders of the *?'Company were holding shares of total face value of less than Rs.605501-. A well meaning Sec{ion 61 is being illegally mis-interpreted by the Company for the cancellation or extinguishment of shares held by non-promoter shareholders which on the face of itself is outside the scope of section 61. Selective cancellation of minority shareholdings using the brute majority by the promoter shareholders is an act of oppression and mis-management and in any case is outside the scope ofsection 61.
No company in India has adopted a face value of Rs.60550/- till date and therefore the Board of Directors determination of this magic figure of face value of Rs.60550/- is mysterious and puzzling. All the Companies do normally adopt the face value of Rs.100/-, Rs.1000/- etc but
not a single Company has adopted a figure of this nature. There is no explanatidn in the explanatory statement regarding this figure of Rs.60550/-.
The other reasons stated in the explanatory statement are factually effoneous and misleadirig explanations as explained below. of the Company have been held by the same shareholders for a very long time now many of them are not traceable:
1. The shares
The Company is trying to illegally confisticate the shares of persons ,*ilro deceased. It is very unfair to transact the shares of deceased persons without
are the
sonsent of their legal heirs. By adopting the present procedure even the legal heirs are
denied natural justice as they have no forum to agitate on the matter. In any case acquisition of shares held by deceased persons by the promoters is illegal.
2.
Compliance requirements under section 2013 are becoming too complicated for a Company of this size.
The above explanatory statement seems to be a deliberate false and mis leading statement as there is no extra cost involved .
3.
High cost involved in handling and serving current strength of members:
The claim of cost reduction is factually erroneous and is not supported by any statement of savins .
4.
In the best interest of the company:
It
,
;r-/ .
defies elementary logic to state in the explanatory statement that the proposed compulsory acquisition of shares of minority shareholders is"in the best interest of the Company, where as the directors are guilty of not acting in the interest of the Company by trying to illegally enrich the promoter shareholders misusing the provisions of the Companies Act 2013. The shareholders seldom interact with the directors of the Company or even the Company officials except in an Annual General Meeting that too for a short period of 30 to 45 minutes. However the above short AGM is the corporate democratic lifeline and shareholders do come and attend such meetings with high enthusiasm. Many a times the shareholders raise very relevant questions also. Many companies do take such meetings very seriously and the directors interact with them. For a shareholder attending an AGM is like attending an annual religious festival. By compulsory acquisition of shares as proposed the Directors are acting against corporate democracy and ethics.
Under valuation of shares:
It is seen that the payoff per share has been fixed at Rs. 76l-.per
share .How the value was determined is shrouded in mystery as the explanatory statement is silent on the subject. Based
on the payoff rate of Rs. 76l- per share the enterprise value of the company is deterfnined as Rs. 3.68 Crores which is a plain and simple undervalubtion of the shares of the company. The immovable properties owned by the company along with coffee estate of several acres of prime land with buildings and fixed machinery is very much substantially higher arid therefore the valuation of the share managed by the Company is simply illegal enrichment by the promoters .
Violation of Fundamental
Rishts: ,/.
Rights to property is a fundamental right guaranteed by the Constitution of India under article 19 & 3lwhich entitles, any person can acquire and hold any assets in India. A compulsory acquisitlon of immovable property for a public purpose like defence is exempted from the above but with suitable compensation. A private compulsory acquisition of shares by a company'is directly in conflict with the Fundamental Rights. The Supreme Court of India in several cases have determined that any compulsory acquisition of properties other than for public purpose has to be at negotiated rates. Even in the case of M/s Kochi Metro Rail Limited, the land acquisition was determined through negotiations. Therefore I submit that the proposed compulsory acquisition of shares is in violation of Constitution of India relating to the Fundamental Rishts.
The directors while proposing the above resolution have claimed in a formal way that they are neither concerned nor interested in the resolution even though they are aware that the proposed compulsory acquisition of non promoter shareholding increases the stake holding of the promoters. It is also strange to see that the explanatory statement says that the directors are recommending the adoption of the said resolution in the best interest of the company, which as explained above is factually erroneous and the directors have conflict of interest in proposing and recommending the above resolution. In view of the various facts mentioned above, I request you to instruct the Company not to go ahead with the proposal .
Copy to : Chembra Peak Estates Ltd No.2, 5tn Main RMS Layout (Post office Road) Sanjay Nagar Bangalore - 560 094