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CS Executive · Company Law and Practice · Members and Shareholders

After acquiring a dissenting shareholder's shares under the nine-tenths provisions, the transferee company pays the consideration to the transferor company. Which statement about the sum received is correct under the Companies Act, 2013?

The transferor company must pay the sum into a separate bank account and hold it in trust for the persons entitled to the shares, disbursing it to the entitled shareholders within sixty days. It cannot be mixed with its own funds.

  1. AIt is paid into a separate bank account and held in trust for the persons entitled, to be disbursed within sixty daysCorrect
  2. BIt may be used by the transferor company as working capital until claimed
  3. CIt is paid to the Registrar for safekeeping
  4. DIt must be disbursed within one year to the entitled shareholders

Explanation

Sums received by the transferor company are paid into a separate bank account and held in trust for the entitled persons, and disbursed to the entitled shareholders within sixty days. Option B contradicts the trust requirement.

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