Merger or amalgamation of company with foreign company:

Provided under any other law for the time being in force can apply mutatis mutandis to schemes of mergers and amalgamations between the companies registered under this act and the companies incorporated in the jurisdictions of such countries that may be notified from time to time by the central government.


Provided that the central government may make rules in consultation with the Reserve Bank of India connect with mergers and amalgamations.

As subject to the provisions of any other law for the time being in force, a foreign company with a prior approval of Reserve Bank of India merge into a company which is registered under this act or vice versa and the terms and conditions of the scheme of merger may provide among other things for the payment of consideration to the merging company shareholders in cash or partly in depository receipts or partly in cash as the case may be and as per the scheme that is to be drawn up for the purpose.

For the purposes of sub-section (2), the expression foreign company means anybody corporate or company incorporated outside India whether having a place of business.

Power to acquire the shares of shareholders dissenting from the scheme or contract which is approved by majority:


If a scheme or contract which involves the transfer of shares or any class of shares in a company i.e. the transferor company to the another company – transferee company has within the time period of four months after making an offer in that behalf by the transferee company which has been approved by the holders of not less than nine tenths in the value of the shares whose transfer been involved other than the shares already held at the date of the offer by or by the transferee company nominee or its subsidiary companies. At any time within the period of two months, the transferee company after the expiry of the said four months give the notice in the prescribed manner to any shareholders who desire to acquire his shares.

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


As under sub-section(1), the notice have been given by the transferee company and the tribunal has not, the application which is made by the dissenting shareholder made an order which is contrary, the transferee company, on the expiry period of one month from the date on which the notice have been given, or if an application to the tribunal by the dissenting shareholder is pending, after the application has been disposed of, just 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 who is appointed by the transferor company the amount or other consideration represents the price which are payable by the transferee company for the required shares which by virtue of this section, that company is entitled to acquire and the transferor company shall-

  • Register the transferee company as the holder of those shares and
  • Within one month from the date of such registration, have to inform to the dissenting shareholders of the fact of such registration and the receipt of the amount of other consideration represents the price payable to them by the transferee company.


The sum which has been received by the transferor company shall be paid into a separate bank account and any other consideration or such sum received shall be held by the company in trust for the several person who are entitled to the shares in respect of which the said sum or other consideration were received respectively and shall disbursed to the entitled shareholders within a period of 60 days.

In relation to an offer which is made by a transferee company to shareholders of a transferor company before the commencement of this act, this section may have effect with the following modifications namely:

In sub-section(1), for the words,  “the shares whose transfer is involved other than the shares which already held at the date of the offer or by a nominee of, the transferee company or its subsidiaries, the words that shares affected would be substituted and

In sub-section (3), the words which are together with the instrument of transfer to be executed on behalf of the shareholder of any person who is appointed by the transferee company and on its own behalf by the transferor company shall be omitted.

A dissenting shareholder includes a shareholder who has not assented to the scheme or contract and any shareholder who has refused or failed to transfer his shares to the transferee company in accordance with the contract or scheme.

Purchase of the minority shareholding:

In the event of an acquirer or a person who is acting in concert with such acquirer becomes the registered holder of ninety percent or more of the issued equity share capital of a company, or in the event of any person or group of persons becomes ninety percent majority or holding the 90 percent of the issued equity share capital of a company, by virtue of an amalgamation, conversion of securities, share exchange or for any other reason, such acquirer, person or group of persons as the case may be shall notify the company of their intention in order to buy the remaining equity shares.

Under sub-section(1), the acquirer, person or group of persons shall offer to the minority of shareholders of the company for buying the equity shares held by such shareholders at a price which is determined on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed.


Without the prejudice to the provisions of sub-section(1) and (2), the minority shareholders of the company may offer to the majority shareholders in order to purchase the minority equity shareholding of the company at the price which can be determined in accordance with such rules that may be prescribed under sub-section(2).

The majority shareholders shall deposit an amount which are equals to the value of shares to be acquired by them under the sub-section (2) or (3), as the case may be, in separate bank account that is to be operated by the transferor company for at least one year for payment to the minority shareholders and such amount can be disbursed to the entitled shareholders within sixty days.

Such disbursement may continue to be made to the entitled shareholders for a period of one year and for any reason that had not been made disbursement within the said period of sixty days or if the disbursement has been made within the aforesaid of sixty days, may fail to receive or claim the payment arising out of such disbursement.

The transferor company may act as a transfer agent in the event of purchase under this section for paying and receiving the price to the minority shareholders and for taking the delivery of the shares and delivering such shares to the majority as the case may be.

In the absence of a physical delivery of shares by the shareholders within the specified time by the company, the share certificate may deemed to be cancelled and the transferor company may be authorized to issue the shares in lieu of the cancelled shares and complete the transfer in accordance with the law and make the payment of the price out of deposit which is made under the sub-section(4) by the majority in advance to the minority by dispatch of such payment.

In the event of shareholders or majority shareholder requiring a full purchase and making the payment of price by deposit with the company for any shareholder or shareholders who have died or ceased to exist or whose successors, heirs, administrators or assignees have not been brought on record by the transmission, the right of such shareholders to make an offer for sale of minority equity shareholding which may continue and be available for a period of 3 years from the date of minority acquisition of majority shareholding.

The shares of the minority shareholders been acquired in pursuance and as on or prior to the date of transfer following such acquisition, the shareholders holding 75 percent or more minority equity shareholding negotiate or reach an understanding on a higher price for the transfer, proposed or agreed upon of the shared held by them without disclosing the fact or likelihood of transfer which takes place on the basis of negotiation, understanding of the agreement, the majority shareholder shall share the additional compensation received by them with such minority shareholders on a pro rata basis.

The expression acquirer and the person acting in a concert shall have the meaning respectively assigned in clause (b) and (e)  of sub-regulation (1) of regulation 2 of the SEBI substantial acquisition of shares and takeovers.

When a majority equity shareholders fails to acquire the full purchase of the shares of the minority equity shareholders, then the provision of this section may continue to apply to the residual minority equity shareholders, even though;

  • Residual minority shareholder shares in a company had been delisted; and
  • One year period which is mentioned in the regulation made by the SEBI (Securities and Exchange Board of India) under the SEBI act, had elapsed.

Leave a Reply