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CS Professional · Corporate Restructuring, Valuation and Insolvency · Fast Track Mergers

A fast track merger of Bharat Gears Pvt Ltd (transferor) into its holding company is registered under section 233. Which statement correctly describes the effect?

Registration of the scheme dissolves the transferor company without winding-up, and its property and liabilities pass to the transferee. Pending legal proceedings continue by or against the transferee, and any shares the transferee holds in itself are cancelled or extinguished.

  1. AThe transferor is dissolved without the process of winding-up, and its liabilities become those of the transfereeCorrect
  2. BThe transferor must first be wound up by the Tribunal before dissolution
  3. CPending legal proceedings against the transferor abate on registration
  4. DShares held by the transferee in its own name continue to be held after the merger

Explanation

Under section 233(8), registration of the scheme has the effect of dissolution of the transferor without winding-up. Under section 233(9), property and liabilities transfer and pending proceedings continue against the transferee. Section 233(10) requires the transferee's own shares to be cancelled, so option D is wrong.

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