Acquisition of Shares

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Bhavani Kumari (Querist)
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04 February 2021 Hi Sir/Madam,

I want to know if a company purchase some shares from the other shareholder, is it required to keep a nominee shareholder as well because in this case a company is becoming a shareholder of another company. Let me draw a example to get it more clear
Example: Let say if Mr.A company purchased 10000 shares of Mr. small b (who is a shareholder of Mr. B company holding shares of 10000 out of total 20000 shares), in this case is it required for Mr.A company to keep a nominee shareholder (since a company is becoming a shareholder of another company).

Kindly let me know, it will be very helpful for me and thanks to everyone who left there answers here to enlighten me. It will great if you let me know the section or any provision regarding this.

Thank you.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 In general, when one company (let's say Mr. A's company) purchases shares from an individual shareholder (Mr. Small B) of another company (Mr. B's company), there typically isn't a legal requirement for Mr. A's company to appoint a nominee shareholder unless there are specific provisions in the articles of association of Mr. B's company or any regulatory requirements that mandate it.

However, it's important to note that this can vary based on the laws and regulations applicable in the jurisdiction where Mr. B's company is incorporated. In some cases, certain types of transactions or changes in shareholding may trigger regulatory requirements or may be governed by specific provisions in company law.