The Delhi High Court has upheld the Registrar of Companies’ order that rejected conversion of Reebok India Company from an “Unlimited Liability Company” to a “Limited Liability Company”.
Justice Subramonium Prasad rejected Reebok’s plea after noting that the reasons given by the RoC cannot be said to be perverse.
RoC had rejected Reebok’s application on observing that the company has suffered substantial financial losses and has a net deficit in current liabilities over assets in excess of ₹2,100 crores, Bar & Bench reported.
The Registrar further said that various prosecutions have been filed by the Serious Fraud Investigation Organization (SFIO) against Reebok for offences under the Companies Act and the Indian Penal Code (IPC).
“The registrar was also not provided with an NOC or undertaking from all the shareholders to support the conversion application and the petitioner did not even issue a public advertisement inviting objections from various creditors/stakeholders on the issue of conversion. The anxiety on the part of the Registrar of Companies that the creditors and stakeholder should not be left high and dry cannot be said to be completely unjustified,” the Court observed.
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