Skip to content

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

A listed company, Kaveri Ltd, merges into an unlisted company, Narmada Pvt Ltd, under a sanctioned scheme. Some Kaveri shareholders choose to opt out. Which statement is correct under section 232(3)(h)?

Opting-out shareholders must be paid under a pre-determined price formula or after valuation, and the amount per share cannot be less than what SEBI regulations specify. Under section 232(3)(h), the unlisted transferee also remains unlisted until it becomes a listed company.

  1. ANarmada automatically becomes listed on the date of the order
  2. BOpting-out shareholders get payment by a pre-determined price formula or valuation, and the amount per share must not be less than what SEBI regulations specifyCorrect
  3. COpting-out shareholders get only the face value of their shares
  4. DOpting-out shareholders have no remedy once the Tribunal sanctions the scheme

Explanation

Section 232(3)(h) says the transferee remains unlisted until it becomes listed, and opting-out shareholders are paid per a pre-determined price formula or valuation. The payment per share cannot be less than what SEBI regulations specify. Automatic listing and face-value-only payment are not provided.

Did you get it right without looking?

One question tells you little. A timed set on Compromise, Arrangement and Amalgamations - Concepts shows your real accuracy, how long you take and where you lose marks.

Practise Compromise, Arrangement and Amalgamations - ConceptsFree diagnostic mock

More Compromise, Arrangement and Amalgamations - Concepts questions