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Issue in relation to transfer of share in company

CA Yuvraj Tiwari (Chartered Accountant) (86 Points)

20 March 2013

What are the issues in relation to transfer of share upto 10%??

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VIKAS.A (SOMETHING IS BETTER THAN NOTHING) (1095 Points)
Replied 20 March 2013

1) Every body corporate or bodies corporate under the same management holding whether singly or in theaggregate, ten per cent or more of the nominal value of the subscribed equity share capital of any other companyshall, before transferring one or more of such shares, give to the Central Government an intimation of its or theirproposal to transfer such share, and every such intimation shall include a statement to the particulars of the shareproposed to be transferred, the name and address of the person to whom the share is proposed to be transferred, andshareholding, if any, of the proposed transferee in the concerned company and such other particulars as may beprescribed.

(2) Where, on receipt of an intimation given under sub-section (1) or otherwise, the Central Government is satisfied

that as a result of such transfer, a change in the composition of the Board of directors of the company is likely to takeplace and that such change would be prejudicial to the interests of the company or to the public interest, it may, byorder, direct that -

(a) no such share shall be transferred to the proposed transferee :

Provided

that no such order shall preclude the body corporate or bodies corporate from intimating, in accordance with

the provisions of sub-section (1), to the Central Government its or their proposal to transfer the share to any other

person, or

(b) where such share is held in a company engaged in any industry specified in Schedule XV, such share shall betransferred to the Central Government or to such corporation owned or controlled by that Government as may bespecified in the direction.

(3) Where a direction is made by the Central Government under clause (b) of sub-section (2), the share referred to insuch direction shall stand transferred to the Central Government or to the corporation specified therein, and theCentral Government or the specified corporation, as the case may be, shall pay, in cash, to the body corporate orbodies corporate from which such share stands transferred, an amount equal to the market value of such share within

the time specified in sub-section (4).

Explanation

. -

In this sub-section, "market value" means, in the case of a share which is quoted on any recognised

stock exchange, the value quoted at such stock exchange on the date immediately preceding the date on which the

direction is made, and, in any other case, such value as may be mutually agreed upon between the holder of theshare and the Central Government or the specified corporation, as the case may be, or in the absence of suchagreement, as may be determined by the Court.

(4) The market value referred to in sub-section (3) shall be given forthwith, where there is no dispute as to such valueor where such value has been mutually agreed upon, but where there is a dispute as to the market value, such value as is estimated by the Central Government or the corporation, as the case may be, shall be given forthwith and the

balance, if any, shall be given within thirty days from the date when the market value is determined by the court.

(5) If the Central Government does not make any direction under sub-section (2) within sixty days from the date ofreceipt by it of the intimation given under sub-section (1), the provisions contained in sub-section (2) with regard to thetransfer of such share shall not apply.

Inserted by the MRTP (Amendment) Act, 1991 w.r.e.f. 27-9-1991.