COMPANIES ACT - 1963 (ACT 179)

    Section - 234 - Power to Acquire Shares of Minority on Acquisition of Subsidiary Company

    (1) Where a body corporate, whether a company within the meaning of this Code or not, in this section referred to as the transferee company, has made an offer to the holders of shares in a company, in this section referred to as the transferor company, then, provided that the conditions specified in subsection (2) of this section are duly fulfilled, the transferee company may compulsorily acquire the shares in the transferor company in the manner specified in this section.

    (2) This section shall apply if,

    (a) the offer by the transferee company is made to the holders of the whole of the shares in the transferor company, other than those already held by the transferee company or any of its associated companies or by nominees for the transferee company or any of its associated companies;

    (b) the consideration for the acquisition is either,

    (i) the allotment of shares in the transferee company, or

    (ii) the allotment of shares in the transferee company or, at the option of the holders, a payment of cash;

    (c) the same terms are offered to all the holders of the shares to whom the offer is made or, where there are different classes of shares, to all the holders of shares of the same class;

    (d) within four months after the making of the offer it has been accepted in respect of not less than nine-tenths of the whole of the shares and of not less than nine-tenths of the shares of each class, other than shares already held as aforesaid and the holders of such shares are not less than three-fourths in number of the holders of those shares and of each class thereof.

    (3) Where the conditions specified in subsection (2) of this section are fulfilled, the transferee company may, within two months thereafter, give notice in the prescribed form to any shareholder who has not accepted the offer in respect of all his shares that it desires to acquire his shares and when such notice is given the transferee company shall, unless on an application made by the shareholder in accordance with subsection (4) of this section the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms of the offer.

    (4) At any time within a period of two months from the service of the notice referred to in subsection (3) of this section, any shareholder to whom notice has been given in accordance with such subsection may apply to the Court; and the Court may order that the transferee company shall not be entitled to acquire the share of such holder or that the transferee company shall be bound to acquire those shares upon such other terms as the Court may order.

    (5) On any application to the Court under subsection (4) of this section the Court, before making any order may, if it thinks fit, refer the matter to the Registrar who shall appoint one or more competent reporters to investigate the fairness of the offer and to report thereon to the Court.

    (6) The remuneration of the reporters shall be fixed by the Registrar and it and the proper expenses of the investigation shall be borne by the transferee company or by the applicant or both as the Court shall order.

    (7) Where the Court makes an order under subsection (4) of this section that the transferee company shall be bound to acquire the shares concerned upon terms different from those of the original offer then, unless the Court shall otherwise order, the transferee company shall give notice in the prescribed form, of such amended terms, to all other holders of shares of the same class and to all former holders of shares of the same class who accepted the original offer.

    (8) At any time within two months of the giving of such notice any shareholder shall be entitled to require the transferee company to acquire his shares upon the same terms as those ordered by the Court and any such former holder shall be entitled to require the transferee company to pay or transfer to him any additional consideration to which he would have been entitled had his shares been acquired on the terms ordered by the Court.

    (9) Where a notice has been given by the transferee company under subsection (3) of this section and the Court has not, on an application by the shareholder under subsection (4) of this section, ordered to the contrary, the transferee company shall,

    (a) on the expiration of two months from the date on which notice has been given, or

    (b) if an application by the shareholder under subsection (4) of this section is then pending after that application has been disposed of,

    transmit a copy of the notice to the transferor company together with an instrument of transfer executed on behalf of the shareholder by any person appointed by the transferee company and on its own behalf by the transferee company, and transfer to the transferor company the shares, or if the shareholder has exercised the cash option, if any, pay to the transferor company the cash, representing the consideration payable by the transferee company for the shares which by virtue of this section the transferee company is entitled to acquire, and the transferor company shall thereupon register the transferee company as the holder of those shares.

    (10) Any sums received by the transferor company under subsection (9) of this section shall be paid into a separate bank account and any such sums and all shares so received shall be held by the transferor company on trust for the several persons entitled to the shares in respect of which the said sums and shares were received.