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CS Professional · Corporate Restructuring, Valuation and Insolvency · Regulatory Approvals of Scheme

After Sundaram Ltd completes the compulsory acquisition of a dissenting shareholder's shares under Section 235, the transferor company receives the price from the transferee company. How must the transferor company deal with the money?

The transferor company must pay the sum into a separate bank account and hold it, with any other consideration, in trust for the persons entitled to the shares. It must then disburse it to the entitled shareholders within sixty days, as Section 235(4) provides.

  1. ACredit it to its general reserves and pay dissenters at the next annual general meeting
  2. BPay it into a separate bank account, hold it in trust for the entitled persons and disburse it within sixty daysCorrect
  3. CHold it in its ordinary current account and disburse it within one year
  4. DReturn it to the transferee company until the dissenting shareholders claim it

Explanation

Section 235(4) requires any sum received by the transferor company under the section to be paid into a separate bank account. The sum and any other consideration are held in trust for the persons entitled to the shares and are disbursed to the entitled shareholders within sixty days. Mixing it with general funds or waiting for claims contradicts this.

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