The NCLT has rejected a resolution plan due to lack of statutory valuation for a ₹1,000 share conversion, resulting in ordered liquidation for non-compliance with the Companies Act.
NCLT Rejects ₹1,000 Share Conversion Plan; Orders Liquidation
The National Company Law Tribunal (NCLT) has rejected a resolution plan that included a proposed ₹1,000 share conversion, citing the lack of a statutory basis for valuation required under the Companies Act. As a result, the NCLT ordered the liquidation of the entity involved.
The Tribunal emphasized that all share conversion plans must adhere strictly to statutory valuation protocols to ensure compliance with the law. In this case, the absence of a substantiated valuation led the Tribunal to question the legitimacy of the proposed conversion.
Practitioners must take heed of this ruling, as it underscores the need for compliance with statutory requirements when proposing resolutions, particularly those involving share conversions. Failure to do so could lead to severe repercussions, including the potential for liquidation.
Citations
- NCLT Order (2026) 1 NCLT 1
