nomination of shareholder and beneficial ownership

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binita (Querist)
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23 October 2010 Let us consider A, a listed company, acquires all shares of B, another public ltd. co.Now to bring the min. no.of members to 7 A nominates another 6 individuals to be members of B apart from itself(1+6=7)and arranges to transfer 1 share each in the names of these 6 people(these 6 will not be paying for these shares). If A has to retain its 100% ownership status should these 6 people appear in B's register of members as joint holders in respect of these 6 shares with A or should they appear as nominees only?
What will be the legal difference in both cases?
Also advice regarding giving of declaration of beneficial ownership under sec. 187C of Cos. Act. Will it be required in case of joint holdership?

Satish Rathi

Satish Rathi (Expert)
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24 October 2010 If A has to retain 100% ownership, thr r 2 ways;

1. hold shares jointly. 1st jointholder should be the company.

2. other nominees can hold shares either individualy or jointly as nominees.
in this case, Form 22B is to be filed by the Company with ROC by B Limited. Form I & II are to be signed by the nominees and A and given to the Company.

Option 2 is more advisable as nominees does not have any powers per se to transfer or dispose these shares. and nominee declarations are filed with ROC too.

Further, at the time of transfer to the nominees, pl get onen extra share transfer form containing only details of such shares and his name. Latr on if that nominee refuses to transfer these shares or leaves the company, u can get that share transfer form validated and used to effect further transfer.

Hope this satisfies ur query.

Regards,
Satish Rathi

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