Can a liquidator transfer/distribute property (asset in kind) to the shareholders when in voluntary liquidation?
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Voluntary liquidation
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Quick Summary
Shareholders have the last right, so if any asset remains even after paying all the liabilities it belongs to shareholders
can you share any documentary proof or law stating this because the CS here have mixed opinion about it
Thanks
Distribution in kind in voluntary liquidation:
• Under IBC Sec 59 (voluntary liquidation) and the IBBI (Voluntary Liquidation Process) Regulations, the liquidator distributes proceeds from asset realisation. Regulation 37 permits distribution of assets in kind to stakeholders (shareholders), if approved by the contributories (special resolution).
• Tax: distribution of assets on liquidation isn't a transfer by the company (Sec 46(1)). Shareholders: the FMV of assets received minus cost of shares is capital gains, with the accumulated-profits portion deemed dividend (Sec 2(22)(c)) (Sec 46(2)).
• Stamp duty on transfer of immovable property to shareholders applies.
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