Company Law and Practice · Compromise, Arrangement and Amalgamations - Concepts

Takeover and Acquisition of Shares: Sections 235 and 236

Updated 11 October 2026 · Fact-checked

Section 235 lets a transferee company compulsorily acquire shares of dissenting shareholders once holders of at least nine-tenths in value approve its offer within four months. Section 236 lets an acquirer holding 90% or more of equity buy out the minority at a registered valuer's price. Solve by checking the threshold, timing, price and deposit.

Understand Takeover and Acquisition of Shares

A takeover offer is an offer by one company (the transferee company) to buy the shares of another company (the transferor company). Most shareholders may accept. A few may refuse. Without a special rule, those few could block full control. The Act gives two squeeze-out routes.

Section 235 works after an offer under a scheme or contract. If holders of not less than nine-tenths in value of the shares involved approve it within four months of the offer, the transferee company can serve notice on the dissenting shareholders that it wants their shares. The nine-tenths is counted on the shares whose transfer is involved, leaving out shares the transferee company (or its nominee or its subsidiaries) already held at the date of the offer.

A dissenting shareholder includes one who did not assent, and one who failed or refused to transfer shares as per the scheme or contract. The transferee company must give notice within two months after the four months expire. The dissenter has one month from the notice to apply to the Tribunal. Unless the Tribunal orders otherwise, the transferee company is entitled and bound to acquire the shares on the same terms as offered to the approving shareholders.

Section 236 is different. It applies when an acquirer, or a person acting in concert, becomes the registered holder of 90% or more of the issued equity share capital. This can happen by amalgamation, share exchange, conversion of securities or any other reason. The acquirer must notify the company of its intention to buy the remaining equity shares and offer to buy them at a price fixed on a registered valuer's valuation, under the prescribed rules.

Section 236 also works in reverse. The minority can offer their shares to the majority at the same valuation-based price. The majority must deposit the value of the shares in a separate bank account operated by the company whose shares are being transferred, for at least one year. Payment must be made within sixty days.

Key rules to remember

Section 235 approval threshold: Approval ≥ 9/10 in value of shares whose transfer is involved; Shares already held at the offer date by the transferee company, its nominee or its subsidiaries are excluded.
Section 235 time limits: Approval within 4 months of offer; notice within 2 months after those 4 months; The dissenter may apply to the Tribunal within 1 month from the date of notice.
Section 235 terms of acquisition: Price = terms offered to approving shareholders; Unless the Tribunal orders otherwise on the dissenter's application.
Section 235 handling of money: Separate bank account; disburse within 60 days; inform dissenters within 1 month of registration; The transferor company holds the sum in trust for the entitled shareholders.
Section 236 trigger: Acquirer (or persons acting in concert) holds ≥ 90% of issued equity share capital; Any cause counts: amalgamation, share exchange, conversion of securities or other reason.
Section 236 price and deposit: Price = registered valuer's valuation; deposit = value of shares to be acquired, kept at least 1 year; Payment to entitled shareholders within 60 days; account operated by the company whose shares are being transferred.
Section 236 follow-on rights: Heirs' right: 3 years; 75% minority higher-price sharing: pro rata; If 75% or more of the minority negotiate a higher price without disclosure, the majority shares the extra compensation pro rata.

How to solve Takeover and Acquisition of Shares questions

Use this order for any problem or theory question on squeeze-out of minority shareholders.

1Identify the route. An offer under a scheme or contract approved by shareholders points to Section 235. A holder reaching 90% or more of issued equity capital points to Section 236.
2Test the threshold. For Section 235, check nine-tenths in value of shares involved, after excluding shares already held by the transferee company, its nominee or subsidiaries. For Section 236, check 90% of issued equity share capital.
3Check the timing. For Section 235, approval within four months of the offer and notice within two months after that. Count the dates carefully.
4Identify who is dissenting and their remedy: application to the Tribunal within one month of notice under Section 235.
5State the price rule: the same terms as approving shareholders under Section 235; a registered valuer's price under Section 236.
6State money handling: separate bank account, trust, and disbursement within sixty days; for Section 236 a deposit held at least one year.
7Write a conclusion that applies the section to the facts: can the acquirer compel the sale, and on what terms.

Quickest way: Two-section checklist

When to use it: Use it when the question gives dates, percentages and asks whether the acquirer can force the minority out.

Write 235 or 236 at the top after reading the trigger.
Compute the percentage: approval over shares involved (235) or holding over issued equity capital (236).
Mark the cutoff: 90% or nine-tenths. Below it, no compulsory right.
For 235 add the timeline: 4 months, then 2 months, dissenter 1 month.
Close with price and 60-day payment, then one line of conclusion.

Common mistakes in Takeover and Acquisition of Shares

Mixing up Sections 235 and 236.
Both use a 90% figure and both deal with minority buy-out.
Fix: Remember: 235 follows an offer under a scheme or contract and measures approval; 236 follows a holding of 90% or more of equity and uses a valuer's price.
Counting the nine-tenths on all shares of the company under Section 235.
Students forget the base is the shares whose transfer is involved.
Fix: Exclude shares already held at the offer date by the transferee company, its nominee or its subsidiaries before applying the nine-tenths test.
Treating nine-tenths as nine-tenths in number of shareholders.
Majority tests elsewhere often use members present and voting.
Fix: Section 235 says nine-tenths in value of shares. Calculate by value.
Applying Section 236 to preference shareholders or total capital.
The word shareholding is read loosely.
Fix: The section speaks of issued equity share capital and remaining equity shares.
Saying the dissenter has no remedy.
The acquirer's power looks absolute.
Fix: Under Section 235 the dissenter may apply to the Tribunal within one month of the notice, and the Tribunal may order otherwise.
Missing the money-handling rules.
Students stop at the right to acquire.
Fix: Add the separate bank account, the trust and the sixty-day disbursement, and under Section 236 the minimum one-year deposit.

Worked examples

Example 1

Alpha Ltd makes an offer to the shareholders of Beta Ltd to acquire 10,00,000 shares. Alpha already held 2,00,000 shares of Beta at the offer date. Of the remaining 8,00,000 shares involved, holders of 7,40,000 shares approve the offer within four months. Can Alpha compulsorily acquire the shares of the dissenters under Section 235?

Show the solution

Provision: Section 235(1) requires approval by holders of not less than nine-tenths in value of the shares whose transfer is involved, excluding shares already held by the transferee company at the offer date.
Shares involved: 10,00,000 − 2,00,000 = 8,00,000.
Required approval: 9/10 × 8,00,000 = 7,20,000 shares.
Actual approval: 7,40,000, which is 92.5% of 8,00,000 and exceeds 7,20,000.
Timing: approval came within four months of the offer, so the condition is met. Alpha must give notice within two months after the four months expire.

Answer: Yes. Approval of 7,40,000 shares exceeds the 7,20,000 needed, so Alpha may give notice to dissenting shareholders and acquire their shares on the same terms as offered to the approving shareholders, unless the Tribunal orders otherwise on a dissenter's application made within one month of the notice.

Example 2

Following an amalgamation, Rohan Industries Ltd holds 4,60,000 of the 5,00,000 issued equity shares of Meera Ltd. Advise Rohan on what it must do about the remaining shares under Section 236.

Show the solution

Provision: Section 236(1) applies when an acquirer becomes registered holder of 90% or more of issued equity share capital, including by amalgamation.
Holding: 4,60,000 ÷ 5,00,000 = 92%, which is above 90%, so the section applies.
Duty: Rohan must notify Meera Ltd of its intention to buy the remaining equity shares, 40,000 shares.
Price: Rohan must offer a price determined on valuation by a registered valuer under the prescribed rules.
Deposit and payment: Rohan must deposit the value of shares to be acquired in a separate bank account operated by the company whose shares are being transferred, for at least one year. The amount is to be disbursed to entitled shareholders within sixty days.
Minority right: the minority may also offer their shares to Rohan at the same valuation-based price.

Answer: Rohan holds 92%, so Section 236 applies. It must notify the company and offer to buy the remaining 40,000 equity shares at a registered valuer's price, deposit the value in a separate account for at least one year, and see payments made within sixty days.

Exam tips

Begin every answer by naming the section and its trigger. Examiners look for 235 versus 236 first.
Write the numbers: nine-tenths in value, four months, two months, one month, sixty days, one year.
In problems, show the subtraction of shares already held before computing the nine-tenths.
Always add the dissenter's Tribunal remedy and the separate bank account point to cover all the marking points.
End with a one-line conclusion that answers the question asked.

Practice questions from Compromise, Arrangement and Amalgamations - Concepts

Takeover and Acquisition of Shares in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

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Takeover and Acquisition of Shares: frequently asked questions

What is the difference between Section 235 and Section 236?

Section 235 applies after an offer under a scheme or contract is approved by nine-tenths in value of the shares involved, and lets the transferee company acquire dissenters' shares on the same terms. Section 236 applies when an acquirer holds 90% or more of issued equity share capital and must buy out the minority at a registered valuer's price.

Who is a dissenting shareholder under Section 235?

A shareholder who has not assented to the scheme or contract. It also includes one who failed or refused to transfer shares to the transferee company as per the scheme or contract.

Can a minority shareholder force the majority to buy under Section 236?

Yes. Section 236(3) lets the minority offer their equity shares to the majority holders at the price determined under the prescribed rules.

Where is the money kept in a Section 236 buy-out?

The majority shareholders deposit the value of the shares in a separate bank account operated by the company whose shares are being transferred. It is held for at least one year, and amounts are disbursed to entitled shareholders within sixty days.