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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

A winding-up petition against Narmada Foods Ltd was presented on 1 July. On 15 July, shareholder Ms Gupta transferred 5,000 shares to Mr Shah by a registered transfer, with no Tribunal order. Which statement is correct under the Companies Act, 2013?

The transfer is void unless the Tribunal otherwise orders. Section 334 expressly covers transfers of shares and alterations in members' status made after commencement of winding up, which occurred on presentation of the petition on 1 July. Board approval does not cure it.

  1. AThe transfer is void unless the Tribunal otherwise orders, as it is a transfer of shares after commencementCorrect
  2. BThe transfer is valid because share transfers are between members and not the company
  3. CThe transfer is valid if the company's board approved it
  4. DThe transfer is void absolutely and the Tribunal cannot validate it

Explanation

Section 334 covers any transfer of shares in the company or alteration in the status of members made after commencement. It is void unless the Tribunal otherwise orders. The last option is wrong because the Tribunal has power to validate.

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