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Company Law Doubt

Vishnu Nair (Chartered Accountant) (935 Points)

11 January 2010

Does Companies Act restrict an individual from acquiring shares in a public company to 25% of the paid up Capital?

This is page number 694 from Financial Management-Ninth Edition( by I M Panday)

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15 Replies

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 11 January 2010

No, there is not any restrictions from obtaining shares to the extent of 25% of the paid up capital. However, in case of listed company, certain disclosures are required on the part of shareholder and company as well.

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 11 January 2010

Agree with learned member.

Vishnu Nair (Chartered Accountant) (935 Points)
Replied 11 January 2010

In the book Financial Management-Ninth Edition( by I M Panday) its stated like that.

In page number 694 under the heading Legal Measures against Take overs its written that-

"The Companies Act restricts an individual or a company or a group of individuals from acquiring shares, together with the shares held earlier, in a public company to 25 per cent of the total paid up capital"

I M Pandey

prince goel (student) (66 Points)
Replied 11 January 2010

what treatment in issue of share before incorporated company

RADHIKA JALAN (agarwal) (1521 Points)
Replied 11 January 2010

yes................

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Vishnu Nair (Chartered Accountant) (935 Points)
Replied 11 January 2010

can someone answer ma doubt.............................

Pooja Rane (Working) (159 Points)
Replied 11 January 2010

can you quote the section no pls... may be its related to smethg else... or it may b subject to certain condition like special resolution or somethg....

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 11 January 2010

Originally posted by : Vishnu Nair
	In the book Financial Management-Ninth Edition( by I M Panday) its stated like that. In page number 694 under the heading Legal Measures against Take overs its written that- "The Companies Act restricts an individual or a company or a group of individuals from acquiring shares, together with the shares held earlier, in a public company to 25 per cent of the total paid up capital" I M Pandey

There is no doubt that the interpretation of author is wrong here. I have no idea in which context above lines were used. Well i would suggest you one thing -- do not waste your time.

Regards

CA Bhuvnesh Kumar (Chartered Accountant) (69 Points)
Replied 11 January 2010

There is no such restriction in Company Law. Although some restrictions exist in SEBI Act to control the holding. But these are for the sole purpose of regulation not completely prohobited.

astha (CA, CS) (85 Points)
Replied 11 January 2010

An Individual can acquire shares in a Co. to the extent of 25%. But the person has to comply with SEBI Takeover Regulations i.e inform the Company for the first time when the acquisitions reaches 5% and each time when the acqusition reaches the percentages specified in the Takeover Regulations. Also public announcement is required when the acquisition reaches 15%.