The National Company Law Tribunal (NCLT) has approved Mahindra Homes' capital reduction proposal, following a special resolution from its equity shareholders. This decision involves the cancellation of specific Series B and C equity shares held by global investment firm Actis and Mahindra Lifespace Developers. With approximately INR 214 crore received from homebuyers classified as current liabilities, Mahindra Homes assures that the reduction will not disrupt operations or project timelines, especially under RERA compliance. The ruling underscores the significance of clear communication with stakeholders, particularly homebuyers, in maintaining trust within the real estate sector.
The National Company Law Tribunal (NCLT) has approved Mahindra Homes' proposal for capital reduction. Mahindra Homes is a subsidiary of Mahindra Group's real estate and infrastructure development arm, Mahindra Lifespace Developers.
The company sought confirmation for a 'special resolution' passed by its equity shareholders to reduce the issued, subscribed, and paid-up equity share capital. This reduction will involve the cancellation of certain Series B and Series C equity shares held by global investment firm Actis and Mahindra Lifespace Developers, respectively.
Mahindra Lifespace Developers established Mahindra Homes in June 2010 to develop residential projects in key Indian markets, with a 50:50 partnership between Mahindra and Actis.
Mahindra Homes clarified that approximately INR 214 crore received from homebuyers has been classified as current liabilities under Indian Accounting Standards (IND AS). These funds are considered revenue and will be accounted for as properties are delivered. The company assured that the capital reduction will not affect its operations or project timelines, particularly in relation to RERA compliance. Notices were sent to homebuyers, recognized as financial creditors, to further protect their interests.
In July, the NCLT instructed Mahindra Homes to inform homebuyers about the proposed reduction of equity share capital.
Represented by advocates from Hemant Sethi & Co, Mahindra Homes' proposed to reduce its share capital by utilizing the securities premium account, ensuring compliance with Section 52 of the Companies Act, 2013. This section requires NCLT approval for any use of the securities premium account for purposes outside specified uses, such as issuing bonus shares or share buybacks.
As a result of the reduction, the paid-up equity capital will decrease from INR 86.85 lakh to INR 84.45 lakh, while the securities premium balance will drop from INR 335.54 crore to INR 215.58 crore. The shareholding structure and promoter composition will remain unchanged.
This ruling sets a precedent for future capital reduction and restructuring cases, emphasizing the importance of effective communication with all stakeholders, particularly homebuyers, to maintain trust and compliance in the real estate sector.
The NCLT's approval of Mahindra Homes' capital reduction marks a significant step in the company's strategic financial management while reinforcing its commitment to transparency and stakeholder engagement. By addressing the concerns of homebuyers and ensuring compliance with regulatory standards, Mahindra Homes sets a positive precedent for future capital restructuring initiatives in the real estate industry. This move not only strengthens the company's position but also highlights the critical importance of effective communication in fostering trust and stability among all parties involved.
Advertisement
Facebook
Whatsapp
