Siyaram Silk Mills secures NCLT approval for bonus preference shares
Siyaram Silk Mills Limited secured NCLT approval on July 21, 2026, to issue bonus preference shares to shareholders, utilizing general reserves. The scheme allocates 4 Series I and 3 Series II shares for every equity share held. Approved by the board and shareholders, the plan ensures creditor interests are protected and complies with SEBI and Companies Act regulations.
*this image is generated using AI for illustrative purposes only.
Siyaram Silk Mills Limited has received approval from the National Company Law Tribunal (NCLT), Mumbai Bench, to issue preference shares by way of bonus to its shareholders, a move aimed at distributing surplus reserves. The tribunal's order, dated July 21, 2026, sanctions the scheme of arrangement under Section 230 of the Companies Act, 2013, allowing the company to reward shareholders by utilizing its general reserves. The scheme provides for the issuance of fully paid-up preference shares to eligible equity shareholders as of the record date.
The approval follows a unanimous decision by the board of directors on October 26, 2024, and subsequent approvals from equity shareholders and unsecured creditors in meetings held on December 29, 2025. The scheme involves issuing two series of preference shares: Series I and Series II. The issuance is designed to optimize the use of the company's substantial surplus reserves, which exceed its current and future business needs, while ensuring sufficient liquidity remains to meet obligations to lenders and other stakeholders.
Under the sanctioned scheme, the company will issue preference shares to existing equity shareholders based on a specific ratio. The allotment will be made to shareholders whose names appear in the register of members or depository records on the record date. The preference shares will be listed securities, providing flexibility in liquidity management until redemption, and will be issued in dematerialized form.
| Preference Share Series | Face Value | Ratio per Equity Share |
|---|---|---|
| Series I | ₹10 each | 4 shares for every 1 equity share of ₹2 each |
| Series II | ₹10 each | 3 shares for every 1 equity share of ₹2 each |
The company stated that the rationale for the scheme is to distribute excess funds to shareholders while maintaining strong corporate governance and transparency. The preference shares will be issued without any release of assets at the time of issuance. The company has undertaken to comply with all necessary statutory requirements, including filing returns of allotment with the Registrar of Companies and adhering to regulations set by the Securities and Exchange Board of India (SEBI) and stock exchanges.
The NCLT order directs the company to file a certified copy of the order and the scheme with the Registrar of Companies within 30 days of receipt. Additionally, the company must submit the order to the Superintendent of Stamps for stamp duty adjudication within 60 days. The tribunal clarified that the Income Tax Department remains at liberty to examine any tax implications arising from the scheme. The company will take further steps to implement the scheme upon receiving the certified copy of the tribunal's order.
Historical Stock Returns for Siyaram Silk Mills
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.18% | -3.33% | -1.95% | +8.59% | -13.82% | +51.74% |
How will the issuance of Series I and Series II preference shares impact Siyaram Silk Mills' dividend payout policy and future cash flow management?
What tax liabilities might shareholders face regarding the receipt of these bonus preference shares, given the Income Tax Department's reserved right to examine implications?
How is the market likely to react to the listing of these preference shares, and what effect could this have on the liquidity and volatility of the existing equity stock?
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