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CS Executive · Company Law and Practice · Compromise, Arrangement and Amalgamations - Concepts

Kapoor Pharma Ltd, a listed company, merges into Iyer Labs Pvt Ltd, an unlisted company, under a Section 232 scheme. Which statement correctly reflects the Act's provisions on this?

The transferee stays unlisted until it becomes listed, and shareholders who opt out are paid under a price formula or valuation. Under Section 232(3)(h), the amount per share cannot be less than what SEBI regulations specify. There is no automatic listing.

  1. AThe transferee becomes listed automatically on the sanction of the scheme
  2. BThe transferee remains unlisted until it becomes listed, and opting-out shareholders are paid a value not less than what SEBI regulations specifyCorrect
  3. CThe Tribunal cannot provide for opting-out shareholders in such a case
  4. DOpting-out shareholders are paid the face value of their shares

Explanation

Section 232(3)(h) provides that the unlisted transferee remains unlisted until it becomes listed. Shareholders who opt out must be paid by a pre-determined price formula or after valuation, and the amount per share must not be less than what SEBI has specified. Automatic listing or face value payment finds no support.

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