These schemes of corporate reconstruction have many inbuilt complex issues. The law has to care about all these complexities.
SHARES OF DISSENTING SHAREHOLDERS (SECTION 235):
Where a scheme or contract involving the transfer of shares or any class of shares in a transferor company to a transferee company has been approved by the shareholders or class of shareholders, the transferee company may give notice to any dissenting shareholder that it desires to acquire his share. The conditions are –
(a) The scheme or contract approved by shareholders with four months of making an offer by the transferee company;
(b) The offer approved by not less than nine – tenth (1/10th) in value of shares whose transfer is involved;
(c) For approval, shares already held by, or by a nominee of transferee company or its subsidiary company shall not be considered;
(d) The notice to dissenting shareholder issued within two months after above said four months.
The transferee company shall within one month from the date on which notice was given, be entitled to and bound to acquire those shares on terms on which the shares of the approving shareholders are to be transferred. The Tribunal may on application of the shareholder order otherwise.
The transferee company shall on expiry of one month, or after disposal of application of shareholder, send a company of the notice to the transferor company together with an instrument of transfer. This instrument of transfer may be executed on behalf of shareholder by any person appointed by the transferor company and on its own behalf by the transferee company. The transferee company shall pay or transfer to the transferor company an amount or consideration representing the price payable by the transferee company for the shares. The transferor company shall –
(a) Register the transferee company as the holder of those shares; and
(b) Within one month inform the dissenting shareholders of the fact of such registration and of the receipt of the amount or other consideration representing the price payable to them by the transferee company.
Any sum received by the transferor company shall be kept into a separate bank account and shall be held in trust for the several persons entitled to the shares in respect of which said sum or consideration were received. The sum so received shall be disbursed to the entitled shareholders within sixty days.
The dissenting shareholder includes a shareholder who has not assented to the scheme or contract and any shareholder who has failed or refused to transfer his shares to the transferee company in accordance with the scheme or contract.
REGISTRATION OF OFFER OF SCHEMES INVOLVING TRANSFER OF SHARES (SECTION 238):
In relation to every offer of a scheme or contract involving the transfer of shares or any class of shares in the transferor company to the transferee company under Section 235 –
(a) Every circular containing such offer and recommendation to the members of transferor company by its directors to accept such offer shall be accompanied by prescribed information;
(b) Every offer shall contain a statement by or on behalf of transferee company disclosing the steps it taken to ensure that necessary cash will be available; and
(c) Every such circular shall be presented to the Registrar for registration and issued only after registration.
The Registrar may refuse, for reasons to be recorded in writing, to register any such circular and communicate such refusal to the parties within thirty days of the application–
(a) The information required not given;
(b) Information is likely to be given a false impression
The company may prefer appeal to the Tribunal against the order of the Registrar refusing to registrar any circular.
The director who issues a circular which has not be registered shall be punishable with fine which shall not be less than twenty – five thousand rupees but which may extend to five lakh rupees.
PURCHASE OF MINORITY SHAREHOLDING (SECTION 236):
When an acquirer along with the person acting in concert or any person or group of person become registered holder of ninety percent or more of issued equity share capital of a company for any reason, such acquirer, person or group of persons shall notify the company of their intention to buy the remaining equity shares.
These reasons may include takeover, amalgamation, share exchange, conversion of securities or any other reason.
The acquirer, person or group of person shall offer to the minority shareholders for buying their shares at a price determined on the basis of valuation.
The minority shareholder may also offer their share to majority shareholders at the price determined on the basis of valuation.
The majority shareholders shall deposit an amount equal to the value of shares to be acquired by them in a separate bank account for payment to the minority shareholders and shall be disbursed to the entitle shareholders within sixty days.
The transferor company, under this section, shall act as a transfer agent.
When a minority shareholder fails to physically deliver shares certificates within specified time, the certificate shall be deemed to be cancelled. The transferor company shall issue share certificate in lieu of cancelled share and complete the transfer and make payment to the minority shareholder.
Where died or ceased to exist; legal heir, successors, administrator or assignee may make offer for sale within a period of three years from the date of majority acquisition.
AMALGAMATION BY GOVERNMENT ORDER (SECTION 237):
The Central Government may by order notified in the Official Gazette provide for the amalgamation of two or more companies into a single company with such property, powers, rights, interests, authorities, privileges, liabilities, duties, and obligations as specified in the order.
The order may also provide for continuation by or against the transferee company of any legal proceedings pending by or against any transferor company. The order may also provide for necessary consequential, incidental and supplemental provisions.
Every member or creditor of each transferor companies before amalgamation shall have almost same interest in or against the transferee company. In case, the interest in or right against the transferee company is less than his interest in or right against the original company, he shall be entitled to compensation assessed by an authority. Every such assessment shall published in the Official Gazette. The compensation so assessed shall be paid to the member or creditor concerned by the transferee company.
Any person aggrieved by any assessment of compensation may within a period of thirty days from the date of publication in the Official Gazette, prefer an appeal to the tribunal.
No order shall be made unless –
(a) a copy of the proposed order has been sent in draft to each company concerned,
(b) the time for preferring an appeal has expired or appeal has been final disposed off,
(c) the Central Government has considered and made such modifications in the draft order in light of suggestions and objections as it think fit, and
(d) a period of not less than two month has been given for such suggestions and objections.
A copy of every such order shall be laid before the Parliament.
PRESERVATION OF BOOKS AND PAPERS OF AMALGAMATED COMPANIES (SECTION 239):
The books and papers of amalgamated company shall not be disposed of without the prior permission of the Central Government. The Central government shall grant such permission only after examination of books and papers, whether they contain any evidence of the commission of any offence in connection with the promotion or formation or management of affairs of the transferor company or its amalgamation or the acquisition of its shares.
LIABILITIES OF OFFICERS FOR OFFENCES COMMITTED (SECTION 240):
The liability in respect of offences committed under this Act by the officers in default, of the transferor company prior to its merger, amalgamation or acquisition shall continue after such merger, amalgamation or acquisition.
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- MERGER OR AMALGAMATION (Companies Act 2013) (aishmghrana.me)
- COMPROMISE AND ARRANGEMENT (Companies Act, 2013): (aishmghrana.me)
- CONTRACTS INVOLVING DIRECTORS (Companies Act, 2013) (aishmghrana.me)