Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Acquisition of Company or Business

Meghdoot Foods Ltd wants to acquire a business by buying shares in Rohini Dairy Ltd. Meghdoot has defaulted on repayment of a public deposit accepted earlier, and the default is continuing. Which statement is correct under section 186?

A company in default in repayment of deposits or interest on them cannot make an acquisition while the default continues. Neither a special resolution nor unanimous Board consent cures this bar, so Meghdoot must first clear the default.

  1. AIt may make the acquisition if a special resolution is passed
  2. BIt may make the acquisition if all directors present consent at the Board meeting
  3. CIt cannot make the acquisition until the default is curedCorrect
  4. DIt may make the acquisition if it informs the Registrar within 30 days

Explanation

Section 186(8) bars a company in default in repayment of deposits or interest thereon from giving any loan, guarantee, security or making an acquisition while the default subsists. No resolution, Board or general meeting, overcomes this bar.

Did you get it right without looking?

One question tells you little. A timed set on Acquisition of Company or Business shows your real accuracy, how long you take and where you lose marks.

Practise Acquisition of Company or BusinessFree diagnostic mock

More Acquisition of Company or Business questions