Treatment of investment of transferor company

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Preety Gupta (Querist)
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26 March 2012 Section 394(2) of the Companies Act, 1956 vests power in the High Court to order for the transfer of any property or liabilities from transferor company to transferee company. In pursuance of and by virtue of such order such properties and liabilities of the transferor shall automatically stand transferred to transferee company without any further act or deed from the date the Court's order is filed with ROC.

In this regard, I have a query, as to:-
(1) What should be the treatment of the investments of the transferor company? Should the transferee company send the share certificates of the investments of the transferor company to the Companies in which they hold such investments for transfer of such shares or should it be via transmission of shares as the transferor company does not exist?

(2) Or should the Companies in which the transferor company holds such investments issue new share certificates in the name of the transferee company?

CA Kishore Tallam

CA Kishore Tallam (Expert)
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02 April 2012 Dear Preety,
The answer to the query is 1st option.
The investee company transfers the holder of the shares from transferor to transferee by virtue of operation of law (transmission) and the investee company need not issue fresh share certificates to transferee company.

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