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CMA Final · Corporate Financial Reporting · Internal Reconstruction (Capital Reduction)

Under Section 66 of the Companies Act, 2013, which statement about creditors in a reduction of share capital is correct?

The Tribunal may confirm a reduction if it is satisfied that each creditor's debt or claim has been discharged, determined or secured, or the creditor has consented. Creditors must also be given notice of the application, so they do have a role.

  1. AThe Tribunal may confirm the reduction if satisfied that every creditor's debt or claim has been discharged, determined, secured or consent obtainedCorrect
  2. BThe Tribunal must reject the reduction if any single creditor objects
  3. CCreditors have no role as the reduction only needs a special resolution
  4. DNotice goes only to the Registrar and not to the creditors

Explanation

Section 66(3) allows confirmation if the debt or claim of every creditor has been discharged, determined, secured or consent obtained. Section 66(2) requires notice to creditors, the Central Government, the Registrar and SEBI for listed companies, so the other options are wrong.

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