24 February 2017
XYZ Ltd. holds some shares in ABC Ltd.It desires to transfer those shares to another Company named PQR Ltd. In this context,my queries are as under: Is it necessary to make an agreement to gift before executing a formal gift? Can one company transfer its investment in shares to another company by way of gift?Will it be necessary to have a provision in the AOA for such transfer of shares?
27 February 2017
In my view Body Corporate cannot give gift as basic requirement of "Gift" being given out of natural love and affection is missing. Individuals can give gift.
01 March 2017
In the case of Deere and Company, 337 ITR 227 it was held that 'love and affection' are not required to make gifts.
A combined reading of section 82 of the Companies Act, Sections 5 and 122 of the TPA is that a company can validly transfer the shares by way of gift, provided where Articles of Association of the donor company permits the same.
In the case Orient Green Power Ltd (OGPL India) [AAR No. 973 of 2012 dated 14 August 2012] the Board resolution passed in the context of making the gift, did not mention any power derived from the Articles of Association and hence the act of making gift was held to be invalid.
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