Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Process of M&A Transactions

Kavya Pharma Ltd, a listed company, seeks shareholder approval for a related party contract above the prescribed threshold. Its promoter, Mr Rao, is a related party to the contract and holds shares. Fewer than 90% of members are relatives of promoters or related parties. What is the position on his voting?

Mr Rao cannot vote on the resolution. The Act prohibits a member who is a related party from voting to approve the contract, and the exception for companies where ninety per cent or more members are relatives of promoters or related parties does not apply here.

  1. AHe may vote since he holds shares
  2. BHe may vote only on a poll
  3. CHe may vote if the Board permits
  4. DHe cannot vote on that resolutionCorrect

Explanation

The second proviso bars any member who is a related party from voting on the resolution approving the contract. The relaxation applies only where ninety per cent or more members, in number, are relatives of promoters or related parties, which is not the case here.

Did you get it right without looking?

One question tells you little. A timed set on Process of M&A Transactions shows your real accuracy, how long you take and where you lose marks.

Practise Process of M&A TransactionsFree diagnostic mock

More Process of M&A Transactions questions