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CS Executive · Capital Market and Securities Laws · Issue of Capital and Disclosure Requirements

Ravi sold his shares in Delta Pharma Ltd and delivered the transfer instrument to the company, but the company has not yet registered the transfer. Meanwhile, the company announces a rights offer and a bonus issue on those shares. How must the company treat the rights offer and bonus issue for those shares under the Companies Act, 2013?

The company must keep the rights offer and the bonus issue in abeyance for those shares until the transfer is registered. Section 126(b) of the Companies Act, 2013 applies where a transfer instrument has been delivered but not yet registered.

  1. AAllot them to the transferor Ravi immediately
  2. BAllot them to the transferee immediately
  3. CCancel the rights and bonus entitlement
  4. DKeep them in abeyance until the transfer is registeredCorrect

Explanation

Section 126(b) requires a company, where a transfer instrument has been delivered but not registered, to keep in abeyance any rights offer under section 62(1)(a) and any fully paid bonus issue relating to those shares. It does not cancel them or allot them to either party.

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