The Ministry of Corporate Affairs (MCA) notified the Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020 which seeks to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
The amendment seeks to include the word “corporate action”, which means any action taken by the company relating to transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares and right issue to the acquirer
The MCA seeks to insert Rule 26A which is in respect of the purchase of minority shareholding held in demat form.
As per the new Rule 26 A, the company shall within two weeks from the date of receipt of the amount equal to the price of shares to be acquired by the acquirer, under section 236 of the Act, verify the details of the minority shareholders holding shares in dematerialised form.
After verification the company shall send notice to such minority shareholders about a cut-off date, which shall not be earlier than one month after the date of sending of the notice, on which the shares of minority shareholders shall be debited from their account and credited to the designated DEMAT account of the company, unless the shares are credited in the account of the acquirer, as specified in such notice, before the cut-off date.
“For the purposes of effecting transfer of shares through corporate action, the Board shall authorise the Company Secretary, or in his absence any other person, to inform the depository under sub-rule (4), and to submit the documents as may be required under the said sub-rule,” the MCA said.
Upon receipt of information the depository shall make the transfer of shares of the minority shareholders, who have not, on their own, transferred their shares in favour of the acquirer, into the designated DEMAT account of the company on the cut-off date and intimate the company.
After receiving the intimation of successful transfer of shares from the depository under sub-rule (6), the company shall immediately disburse the price of the shares so transferred, to each of the minority shareholders after deducting the applicable stamp duty, which shall be paid by the company,
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