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CS Professional · Corporate Restructuring, Valuation and Insolvency · Fast Track Mergers

Beta Ltd, the transferee, holds some of its own shares in the name of a trust following a fast track merger with its wholly-owned subsidiary Gamma Ltd. What is the consequence under section 233?

Under section 233(10), a transferee company cannot hold shares in its own name or through a trust on its own or its subsidiary's or associate's behalf on merger, and all such shares are cancelled or extinguished. Beta Ltd's shares held through the trust are therefore extinguished.

  1. AThe shares continue to be held and may be voted
  2. BThe shares are transferred to the Registrar
  3. CAll such shares are cancelled or extinguished on the mergerCorrect
  4. DThe shares are converted to preference shares

Explanation

Section 233(10) states that the transferee company shall not on merger hold any shares in its own name or in the name of any trust on its behalf or on behalf of any subsidiary or associate, and all such shares shall be cancelled or extinguished on the merger.

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