State whether a petition u/s 241 of Companies Act, 2013 by the minority shareholders is maintainable. Also state whether there is any impact on the…

8 As per the provisions of Section 244, linked to Section 241, of the Companies Act, 2013, in the case of a company having share capital, members eligible to apply for oppression and mismanagement shall be lower of the following: 100 members; or1/10th of the total number of members; orMembers holding not less than 1/10th of the issued share capital of the company. The share holding pattern of Maximo Limited is as follows: 1,00,00,00,000 equity share capital held by 1,000 members. The petition alleging oppression and mismanagement has been made by some members as follows: (i) No. of members making the petition – 90 (ii) Amount of share capital held by members making the petition - 10,00,00,000 The petition shall be valid if it has been made by the lowest of the following: 100 members; or100 members (being 1/10th of 1,000); orMembers holding 10,00,00,000 share capital (being 1/10th of 1,00,00,00,000) As it is evident, the petition made by 90 members meets the eligibility criteria specified under section 244, linked to Section 241, of the Companies Act, 2013 as it meets the minimum requirement of members holding not less than 1/10th of the issued share capital of the company in this case. Therefore, the petition is maintainable. The consent to be given by a shareholder is reckoned at the beginning of the proceedings. The withdrawal of consent by any shareholder during the course of proceedings shall not affect the maintainability of the petition [Rajamundhry Electric Corporation Vs. V. Nageswar Rao A.I.R.]. ALTERNATIVE As per the provisions of Section 244, linked to Section 241, of the Companies Act, 2013, in the case of a company having share capital, members eligible to apply for oppression and mismanagement shall be lower of the following: 100 members; or1/10th of the total number of members; orMembers holding not less than 1/10th of the issued share capital of the company. The paid-up share capital of Maximo Limited is as follows: 1,00,00,00,000 equity share capital comprising of 100 Lakhs equity shares of 100each held by 1,000 shareholders / members. The petition alleging oppression and mismanagement has been made by some members as follows: (i) No. of members making the petition – 90 (ii) Amount of paid-up share capital held by members making the petition - 10,00,00,000 The petition shall be valid if it has been made by the lowest of the following: 100 members; or100 members (being 1/10th of 1,000); orMembers holding not less than 1/10th of the issued share capital of the company. The third condition in the provisions of Section 244 of the Companies Act, 2013 is based on ‘Members holding not less than 1/10th of the issued share capital of the company'. The information of share capital represents the "Paid-up Share Capital." The issued share capital figure is not given nor the expression “Issued and Paid-up Share Capital" is used therein. As a result, the third condition cannot be tested/applied. Hence, based on the information provided, it is evident that the petition should have been made by at least 100 shareholders/members under section 244, linked to Section 241, of the Companies Act, 2013. (i.e. least of minimum 100 members or 1/10th of total 1,000 members) to make it admissible. However, as the petition is made by 90 shareholders which is less than the required number of 100 shareholders, the petition shall not be maintainable. The consent to be given by a shareholder is reckoned at the beginning of the proceedings. The withdrawal of consent by any shareholder during the course of proceedings shall not affect the maintainability of the petition [Rajamundhry Electric Corporation Vs. V. Nageswar Rao A.I.R.].