Mumbai, July 22: The National Company Law Tribunal (NCLT) has sanctioned a Scheme of Arrangement proposed by Siyaram Silk Mills Limited, permitting the company to issue bonus preference shares to its equity shareholders by utilising its accumulated general reserves. The tribunal held that the scheme was fair, reasonable, compliant with statutory requirements, and not contrary to public policy.
“From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy,” the order copy reads.
The order was passed by a Bench comprising Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan on July 21, 2026, on a petition filed under Section 230 of the Companies Act, 2013. The scheme seeks to reward shareholders by distributing surplus reserves through the issuance of listed preference shares rather than cash.
Company Explains Proposal
According to the company, it has accumulated substantial surplus reserves over the years, exceeding its current and anticipated business requirements. Considering its strong cash flow position, the company stated that these reserves could be optimally utilised to benefit shareholders while continuing to meet all obligations towards lenders and other stakeholders.
The company told the tribunal that it has accumulated substantial surplus reserves over the years, far exceeding its current and future business requirements.
It said that, given its strong expected cash flows and sufficient liquidity to meet all liabilities, it proposes to utilise these excess funds by issuing fully paid-up listed preference shares to its equity shareholders as bonus shares under a scheme of arrangement.
The company said the move would reward shareholders while maintaining financial stability, provide shareholders with a listed security offering liquidity, and uphold corporate governance and transparency by implementing the scheme under Section 230 of the Companies Act, subject to the necessary statutory, regulatory and corporate approvals.
Tribunal Grants Approval
The tribunal noted that the scheme had been unanimously approved by the company's Board of Directors and subsequently received the requisite majority approval from equity shareholders and unsecured creditors in meetings held pursuant to the tribunal's earlier directions. The meeting of secured creditors had been dispensed with after they submitted consent affidavits.
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Observing that all statutory compliances had been fulfilled and no objections had been received from any stakeholder, the NCLT sanctioned the Scheme of Arrangement.
It directed the company to file the certified copy of the order with the Registrar of Companies, comply with all statutory formalities, and submit the scheme before the Superintendent of Stamps for adjudication of stamp duty, if applicable.
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