POINTS

EXPLANATION

1. Basic requirements as to acquisition of shares [Sub-section (1)]:

• Approval by majority of shareholders: The scheme or contract involving the transfer of shares or any class of shares in a company (the transferor company) to another company (the transferee company) has been approved by the holders of not less than 9/10th in value of the shares whose transfer is involved.
• Time Limit for receiving approval: The approval from 9/10" of the shareholders in value or more shall be received within four months after making of an offer in that behalf by the transferee company.
• Acquisition of the remaining shares of dissenting shareholders: The transferee company shall express its desire to acquire the remaining shares of dissenting
  shareholders within two months after the expiry of the said four months and shall give notice in the prescribed manner [as per Rule 26 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, notice needs to be sent in Form No.
  CAA-14] to any dissenting shareholder that it desires to acquire his shares. The shares already held at the date of the offer by Transferee Company, or by a nominee of the transferee company or its subsidiary companies shall not be counted for this purpose.

2. Order of Tribunal to acquire shares of dissenting shareholders [Sub-section (2)]:
 

Where a notice under sub-section (1) is given, the transferee company shall, unless on an application made by the dissenting shareholder to the Tribunal, within one month from the
date on which the notice was given and the Tribunal thinks fit to order otherwise, be entitled to and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company.

Explanation - “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.

3. Application by dissenting shareholders [Sub-section (3)]:

1. Where a notice has been given by the transferee company on an application made by the dissenting shareholder and the Tribunal has not, made an order to the contrary (i.e. order made in favor of the company), the transferee company shall, on the expiry of one month from the date on which the notice has been given, or,

2. if an application to the Tribunal by the dissenting shareholder is then pending (nothing is required to be done); after that application has been disposed of-
   
   shall send a copy of the notice to the transferor company together with an instrument of transfer, to be executed on behalf of the shareholder by any person appointed by the transferor company and on its own behalf by the transferee company, and pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which that company is entitled to acquire,

3. The transferor company shall-
   (a) thereupon register the transferee company as the holder of those shares; and
   
   (b) within one month of the date of such registration, 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.
   
    

4. Separate Bank account for disbursement to entitled shareholders [Sub-section (4)]:
 

Any sum received by the transferor company under this section shall be paid into a separate bank account, and any such sum and any other consideration so received shall be held by that company in trust for the several persons entitled to the shares in respect of which the said sum or other consideration were respectively received and shall be disbursed to the entitled shareholders within sixty days.