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CS Professional · Corporate Restructuring, Valuation and Insolvency · Documentation - Merger and Amalgamation

Aryan Textiles Ltd (transferee) holds 5,000 shares of its transferor subsidiary's group trust, and also holds some of its own shares through a trust it controls. The scheme under section 233 is being drafted. Which clause must the draft contain regarding the shares held by the transferee company in its own name or through a trust?

The draft must provide that shares held by the transferee in its own name, or through a trust for itself or its subsidiary or associate, are cancelled or extinguished on merger. The transferee cannot retain them.

  1. ASuch shares to be cancelled or extinguished on the mergerCorrect
  2. BSuch shares to be converted into preference shares
  3. CSuch shares to be held in trust for dissenting shareholders
  4. DSuch shares to be retained and carry voting rights

Explanation

Section 233(10) says the transferee company shall not hold any shares in its own name or through a trust on its own behalf or for a subsidiary or associate. All such shares are cancelled or extinguished on the merger.

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