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Procedures for sale of pvt ltd co shares held by pvt ltd co

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A Raghavendra

Senior Executive - Finance & Corporate A

67 Points Posted on 10 May 2016

Dear Memebers & Experts,

What are the procedures and formalities to be fulfilled in case of the following:

1) Private Limited company is holding a stake (Shares) in its associate Private Limited Company out of which it is willing to sell some of the shares to another private limited company which is not in our group.

what are the formalities to be complied with and also let me know the specific resolution format as well and what is the role of Parent company in this process.[i.e."A" company has alloted some shares to its associate Company"B", now associate Company"B" is intending to sell some of its shares to "C" which is not in the group, the role of Company"A" need to be explained with required formalities and specimens as well please]

Raghav

Replies (1)

Jatin Bajaj

2942 Points Posted on 10 May 2016

The Right to sell the shares to other members shall be subject to certain restrictions contained in the articles of association of the Company. Aricles of Association provides that shares are to be sold under Pre-emption clause at a fair price determined by the Directors or the Auditors of the Company.It may be provided that fair price shall be certified by the Auditors of the Company

Following is the procedure :

Check the provisions and restrictions contained under Article of Association of Company

Transferor shall give notice in writing for his intention to transfer his share to the Company

The Company in turn should notify to other members as regards the availabilty of shares and price at which shares are available to them.

Such price shall be determined by the Directors and Auditors of the Company

But transfer without the consent of shareholder or without prior sanction of Board of Directors shall not be considered valid.