Discretionary Power Of Directors To Refuse Transfer Should Apply In Good Faith Not Arbitrarilty

Last updated: 02 December 2022

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The National Company Law Appellate Tribunal (NCLAT) ruled that directors' discretionary power to refuse the transfer of shares must be exercised in good faith and not in an arbitrary or capricious manner. Directors must consider the shareholder's right to transfer shares and cannot arbitrarily insist on original share certificates if they have been lost, especially when duplicate certificates have been requested.

Court :
NCLAT

Brief :
The Discretionary Power of Directors to refuse 'Transfer of Shares' is not to be resorted to in a deliberate or arbitrary fashion but in good faith. The Directors are to give due weightage to shareholder's right to transfer his share.

Citation :
M/s Vintage Hotels Private Limited & Ors.(Appellants) vs. Mr. Ahamed Nizar Moideen Kunhi Kunhimahin (Respondent) - Dated: 12.11.2020

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Judgement posted by

FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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