Section 235 of the Companies Act, 2013 provides for Acquisition of shareholding of Transferor Company by Transferee Company.

(1) – Where a scheme or contract involving transfer of shares or any class of shares   in a company (The Transferor company) to another company ( the transferee company) exists or entered into between board of directors of both the companies ,then Transferor company needs to place the proposal for approval of its shareholders within 4 months of  making an offer  in  that regard by The Transferee Company.  If the proposal is approved by 90% of the value of shares excluding shares held by Transferee Company or its nominees or subsidiaries, Transferee Company has to give notice (Form CAA.14) to dissenting (minority) shareholders of the Transferor Company to acquire their shares.

(2) Within one month of the notice by Transferee Company to acquire their shares  , dissenting shareholders can make application to NCLT against the offer.  If no such application is made or if NCLT did not give order in favour of the application, Transferee Company is entitled and bound to acquire those shares of dissenting shareholders, on the same terms mentioned in the scheme or contract.

(3) If NCLT has not made order in favour of dissenting shareholders, than Transferee Company  shall send  copy of the Notice with Instrument of Transfer, to the Transferor Company to execute Transfer of shares on behalf of dissenting shareholders in favour of Transferee Company. Simultaneously, Transferee Company should pay/transfer purchase consideration for such  shares of the Transferor Company  to Transferor Company. The Transferor company is entitled to registered such share in the name of Transferee Company and within one month of such registration inform dissenting shareholders

(4) Transferor Company should get the amount of purchase consideration deposited in its separate bank account and it has to disburse the same to all the entitled shareholders within 60 days.


  1. obtain copy of contract or scheme involving purchase of shares of Transferor company
  2. Board Meeting of Transferee Company to make an offer to acquire shares pursuant to the contract or scheme.
  3. Board Meeting of Transferor Company to consider the offer of Transferee Company and call EGM to obtain approval of 90% of its shareholders
  4. Extra Ordinary General Meeting of the shareholders of Transferor Company within 4 months after making of offer by Transferee Company, to approve the offer.
  5. If offer is not approved, there will be no acquisition of shares
  6. If approved, Transferee Company to send Notices to dissenting shareholders to acquire their shares.
  7. If dissenting shareholders did not object the scheme or contract by making application to NCLT or if the application is dismissed, Transferee Company to send Instrument of Transfer with copy of Notice to Transferor Company for execution in its favour.
  8. At the same time, Transferee Company to deposit entire purchase consideration (for shares of majority plus minority) in a separate bank account of Transferor Company.
  9. Transferor Company to register the Transferee company as holder of those shares in its books.
  10. Within one month of such registration, Transferor Company to inform dissenting shareholders about the fact of registration and receipt of purchase consideration for their shares from Transferee Company.
  11. Transferor company to disburse the amount of purchase consideration to the entitled shareholders within sixty days of receipt .


  • When Acquirer or Persons Acting in Concert (PAC) with such Acquirer becomes registered holder of minimum 90% issued equity share capital of a company; or
  1. when a person or group of person becomes holder of minimum 90% issued equity share capital of a company

he/they shall notify the company about their intention to buy remaining equity shares.

The above can happen either by virtue of amalgamation, share exchange, conversion of securities or in any other manner.

(2) Then Acquirer or the Person or group of persons referred above should offer to minority shareholders of the company for buying their equity shares at a price determined on the basis of valuation by Registered Valuer as per Rule 27 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

Rule 27:


(1) In the case of a listed company- the offer price is determined as per applicable SEBI Regulations.

(2) In the case of an unlisted company and a private company –  the offer price is determined after taking into account the following factors –

(a) the highest price paid by the acquirer, person or group of persons for acquisition during last twelve months;

(b) the fair price of shares of the company to be determined by the registered valuer after taking into account valuation parameters including return on net worth, book value of shares, earning per share, price earning multiple vis-à-vis the industry average, and such other parameters as are customary for valuation of shares of such companies;


The registered valuer has to provide the valuation report addressed to the Board of directors of the Transferor Company giving justification for such valuation.


(3) Whether or not any intention is notified under subsection (1) above and whether or not any offer is made under subsection (2) above, minority shareholders may offer on its own  to the majority shareholders to purchase the minority holding at a price determined in accordance with the abovementioned Rule 27.

(4) Majority Shareholders should deposit the amount equal to the value of shares to be acquired by them under subsection (2) or (3) above in a separate account to be operated by The Transferor Company . Transferor Company should keep this account in operation at least for one year for payment to minority shareholders. This amount is disbursed to entitled shareholders within 60 days.

(5) Receipt of purchase consideration from majority shareholders and its payment to minority shareholders and taking delivery of shares from minority shareholders and delivering it to majority shareholders is executed by Transferor Company.

(6) If any shareholder did not physically deliver shares to the Transferor Company within the time specified by it, his share certificates will be deemed to be cancelled and transferor company will be authorised to issue shares in lieu of the cancelled shares and complete the transfer in accordance with law and the Transferor company will make payment of the price to the minority out of deposit made by majority in the separate account referred in subsection (4) in advance

(7) When majority shareholders intend for 100% acquisition and deposit the price for any shareholder who is died or cease to exist or whose transmission in favour of his heirs/successors/administrators/assignees is not effected and recorded in the books, the right of such shareholders to make an offer for sale of minority equity shareholding is continued and available for a period of 3 years from the date of majority acquisition or majority shareholding.

(8) If the acquisition of shares as per this section is completed but the transfer of shares from minority to majority pursuant to this acquisition is yet to be completed, then, on or before the actual transfer of shares, minority shareholders holding minimum 75% of total minority shareholding can negotiate or reach to an understanding on a higher price, for any transfer of shares by them to majority, without disclosing the fact or likelihood of transfer taking place based on this negotiation/understanding/agreement. In this case, majority shareholders shall share additional compensation received by those minority shareholders with such minority shareholders on pro rata basis.

(9) When a shareholder or majority shareholders cannot acquire entire holding of minority shareholders, then the provisions of this section will continue to apply to remaining minority shareholders, even though the shares of the company of the remaining minority shareholders became delisted and the period of one year or the time period specified by SEBI Regulations is lapsed.

Here, in the context of Section 236 of the Companies Act, 2013, Acquirer and Persons acting in concert have same meaning as defined respectively in Regulation (2) (1) (a) and (2) (1) (q) of the Securities and Exchange Board Of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.


  1. Acquirer/PAC with Acquirer/Person/Group of persons becoming holder of 90% or above of issued equity share capital of a Company to notify the company about their intention of acquisition of minority holding of the company. If the Acquirer / PAC/Person/Group of persons is a company, then that company need to hold Board meeting to consider the proposed acquisition of minority shareholders, notification of intention to the other company and making offer to the minority shareholders.
  2. Acquirer/PAC with Acquirer/Person/Group, after mutual discussion with the Company, will appoint Registered Valuer for valuation shares of the Company.
  3. Registered Valuer will address his report to the Transferor Company.
  4. Acquirer/PAC with Acquirer/Person/Group (Majority Shareholders) to make offer to Minority for acquision of their shares.
  5. Irrespective of anything happen as per point no. 1 above and irrespective of offer as per point no. 4 is made or not, minority may make offer to purchase their shares to Majority shareholders at the price determined by Registered Valuer. In this case, if Majority shareholder is a company, then they need to hold board meeting to consider the offer given by Minority.
  6. In either of the acquisition as per point no. 1 or point no. 5 above, Majority Shareholders to deposit the amount equal to the value of shares to be acquired by them in a separate account.
  7. Transferor Company to ensure this account in operation at least for one year for payment to minority shareholders. Transferor Company to disburse this amount to entitled shareholders within 60 days. If it is not made or the entitled shareholder failed to receive or claim the payment arising out of such disbursement, Transferor Company to ensure that the disbursement is continued to be made to the entitled shareholder for one year.
  8. Transferor to receive delivery of shares from Minority and deliver it to Majority Shareholders and ensure funds obtained from the Majority in the separate account and transfer it to minority as against delivery of their shares obtained.
  9. If Transferor Company did not receive physical delivery shares of any minority shareholder within the time specified by it, it will place before its board / committee, the details of respective shares and the Board/ Committee will note the deemed cancellation of the share certificates and will cancel the same and will issue shares in lieu of the cancelled shares in favour of Majority Shareholders and complete the transfer in accordance with law. The Transferor company will make payment of the price to the minority out of deposit made by majority in advance in the separate account.
  10. Transferor Company to record in its books the name of those minority shareholder who is died or whose transmission is not effected, to ensure their right of offer for 3 years from majority acquisition. Transferor company is also to ensure that such shareholder’s shares will not be cancelled and transferred to Majority for 3 years from majority acquisition, as per pt. no. 8 of this checklist.