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

Orion Ltd's fast-track merger scheme with its wholly-owned subsidiary provided for purchase of shares held by a dissenting shareholder at ₹4 lakh, of which ₹1 lakh remained unpaid on the registration date. Who bears the unpaid amount after registration?

The transferee company bears the unpaid ₹1 lakh. On registration of the scheme, any unpaid amount for buying out dissenting shareholders or settling dissenting creditors' debts becomes the transferee's liability, since the transferor is dissolved without winding-up.

  1. AThe dissenting shareholder must wait for the dissolved transferor's liquidator
  2. BThe transferee company, as the amount becomes its liabilityCorrect
  3. CThe Registrar of Companies from a public fund
  4. DThe directors of the transferor company personally

Explanation

Section 233(9)(d) provides that where the scheme provides for purchase of shares held by dissenting shareholders or settlement of debt due to dissenting creditors, the amount to the extent unpaid becomes the liability of the transferee company. The transferor is dissolved without winding-up, so no liquidator exists.

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