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

Ganga Holdings Ltd validly gave notice under section 235 to a dissenting shareholder, Mr Rao, of Yamuna Ltd. Mr Rao did not apply to the Tribunal. Yamuna Ltd then received the price from Ganga and registered Ganga as holder of his shares. Which statement is correct?

Yamuna Ltd must pay the sum into a separate bank account, hold it in trust for the entitled shareholders, and disburse it within sixty days. It must also inform dissenting shareholders of the registration and receipt within one month of registration, so using the funds otherwise is wrong.

  1. AYamuna must hold the sum in a separate bank account in trust and disburse it to entitled shareholders within sixty daysCorrect
  2. BYamuna may use the sum for working capital for one year
  3. CMr Rao must be informed only after sixty days
  4. DGanga keeps the price until Mr Rao claims it

Explanation

Under section 235(4), sums received by the transferor company are paid into a separate bank account and held in trust for those entitled, to be disbursed within sixty days. Section 235(3)(b) also requires informing dissenters within one month of registration. Using the money as working capital breaches the trust.

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