Company Law I Final Project

7/24/2019 Company Law I Final Project

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RIGHTOFFIRSTREFUSAL: A CONTRACTUALRESTRICTIONON

TRANSFEROFSHARES

PPROJECTROJECT

(Towards partial fulfilment of mid-term examination in the subject of Company Law- I)

SUBMITTEDBY: SUBMITTED

TO:

Krati Chouhan (1061) Mr. Anindhya Tiwari

Semester V Faculty o !aw

NATIONALLAWUNIVERSITY, JODHPUR

SUMMERSESSION

(JULY-NOVEMBER2015)


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TABLEOFCONTENTS

1. Ta"le o Contents...........................................................................................................#

2. Ac$nowled%ement..........................................................................................................&

3. A"stract..........................................................................................................................'

4. ntroduction....................................................................................................................

5. *re+,m-tie /i%ht..........................................................................................................6

6. ac$%round....................................................................................................................

7. 2udicial *recedents.........................................................................................................3

+ 4i%h Courts iew...............................................................................................3

+ Su-reme Courts iew.......................................................................................10

8. Current *osition in ndia..............................................................................................1#

9. *roision under the Com-anies Act5 136...................................................................1'

10.Messer 4oldin%s !imited v.Shyam Madanmohan /uia and rs................................16

+ Analysis............................................................................................................13

11.*roision under The Com-anies Act5 #01&..................................................................13

12./estrictions on the transera"ility o shares in *u"lic and *riate Com-anies............#1

13.The /i%ht o First /eusal still remains a si%niicant unresoled controersy in ndian

Cor-orate !aw..............................................................................................................##

14.Conclusion....................................................................................................................#'

15.i"lio%ra-hy.................................................................................................................#6

+ Articles.............................................................................................................#6

+ oo$s................................................................................................................#

+ Cases................................................................................................................#+ /e-orts 7 8otiications...................................................................................#

+ Statutes.............................................................................................................#9

+ :e"sites...........................................................................................................#9

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ACKNOWLEDGEMENT

This -ro;ect is a ma;or milestone in our ;ourney o learnin% in the su";ect o Com-any !aw.

would li$e to "e%in "y than$in%


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ABSTRACT

The aim of this project is to analyse the current position of the clause i!ht of "irst efusal

(#$"%) which is one &ey term in commercial contracts involvin! shareholders of

corporate entities. $" is a pre-emptive option of a non-sellin! shareholder to purchase

shares of a company that a sellin! shareholder proposes to li'uidate. If the non-sellin!

shareholder refuses to purchase such shares the sellin! shareholder can sell the shares to a

third party usually with a stipulation that the terms of such sale and more importantly the

sale price should not be more favourable than those offered to the non-sellin! shareholder. In

a nutshell $" forms an inte!ral part to investors protection in a shareholders a!reement

(#*+,%). $" (amon! other shareholders ri!hts such as ri!ht to first offer ta! alon!

dra! alon!) has however been viewed as a hindrance to the principle of free transferability

of shares of a public limited company laid down in *ection -, of the Companies ,ct

/01.

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INTRODUCTION

Amon% arious -roisions o incor-oratin% documents such as shareholder?s a%reement in a

cor-oration5 an item will oten a--ear la"elled @/F/ B @/i%ht o First /eusal. /F/ is a

contractual ri%ht that o"li%es the sellin% shareholder not to sell its shares in the com-any to a

third -arty without oerin% his shares to another -arty (usually the other e>istin%

shareholders). the e>istin% shareholder(s) does not acce-t the oer5 the sellin% shareholder

is ree to sell his sta$e to a third -arty5 prov!"! #$" %&'" % (o# o( )or" *&vo+r&,'" #"r)%

#$&( #$o%" o**"r"! #o #$" "-%#(. %$&r"$o'!"r%. Meanin% there"y5 the /F/ re=uires the

owner o a -ro-erty to oer the same to the ri%ht holder5 on the same terms as those oered

"y the third -arty5 "eore the owner can sell the -ro-erty to that third -arty. y ado-tin% this

-roision5 the shareholders o the cor-oration -romise that they only will sell their shares

ater ne%otiatin% a -rice with a third -arty and oerin% the shares at that -rice to their ellow

shareholders.

/i%ht o First /eusal in a shareholder?s a%reement -roides the %rantee with a contin%ent

o-tion to -urchase an asset i the %rantor elects to sell the shares1. eore ta$in% into account

the le%al -osition with re%ard to the aoresaid issue5 it would "e worthwhile to hae a "rieinsi%ht into some o the ocal conce-ts -ertainin% to the -roisions incor-orated in

a%reements such as 2oint Venture A%reements? or Shareholders A%reement?.

These a%reements si%ned amon%st the shareholders may include some -roisions5 which

"roadly include the ollowin%D

i. The /i%ht o irst reusalE

ii. ra%+Alon% /i%htE and A ri%ht that ena"les ama;ority shareholderto orce a minority

shareholderto ;oin in the sale o a com-any. The ma;ority owner doin% the dra%%in%

must %ie the minority shareholder the same -rice5 terms5 and conditions as any other

seller.

iii. Ta%+Alon% /i%ht. a ma;ority shareholder sells his or her sta$e5 then the minority

shareholder has the ri%ht to ;oin the transaction and sell his or her minority sta$e in

the com-any.

1 aid . :al$er5ethin&in! the i!ht of "irst efusal5

th

Stanord 2ournal o !aw5 13335iscussion *a-er 8o. #615 The 4arard !aw School.

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A /oo essentially means that i a shareholder entity decides to sell its share in the com-any5

the sellin% shareholder must irst oer its shares to the other shareholder (to whom a /oo is

%ranted)5 who in turn may oer a -rice or the shares to the sellin% shareholder. satisied "y

the -rice oered "y the other shareholder or i the sellin% shareholder is una"le to o"tain a

hi%her -rice rom a third -arty5 then the sellin% shareholder entity only has the o-tion to sell

its shares to the shareholder who has the /oo ri%ht. 4oweer5 i the sellin% shareholder

receies a -rice hi%her than that oered "y the other shareholder rom a third -arty5 the

sellin% shareholder is ree to sell shares to the third -arty at the hi%her -rice.

For instance5 i there are two shareholders in a -riate com-any5 say5 A and 5 with a /oo in

aour o %ranted "y A5 and A decides to sell his shares5 then A must irst oer his shares to

. nly i reuses to -urchase A?s shares5 or i A can o"tain a hi%her -rice or his shares

rom a third -arty than that oered "y 5 can A sell his share to a third -arty. n the other

hand5 i there is a /or in aour o 5 then A is irst re=uired to oer his share to third -arties

and o"tain a -rice rom them or this. A is then re=uired to a--roach with the -rice oered

"y third -arties. can match or "etter the -rice oered "y third -arties5 A must sell his

share to .

Contractual ri%ht under which a -arty has the irst o--ortunity to "uy an asset "eore it is

oered to a third -arty. Com-are with ri%ht o irst reusal. Also called -reem-tie ri%ht or

ri%ht o -reem-tion.

Ty-ically in the /i%ht o irst reusal (/F/)5 at least three -arties are im-licated G the owner

and ri%ht holder who hae contracted or the %rant o the ri%ht and one or more -otential

third+-arty "uyers5 should "e to whom the com-any wishes to oer B sell the shares.#n "rie5

the ri%ht o irst reusal is a$in in conce-t to a call o-tion. The /F/ can coer almost any

sort o assets and is commonly em-loyed in a ariety o contractual settin%s. t is ound5

amon% others5 in real estate sale5 lease contracts5 -ersonal -ro-erty5 a -atient license5 a

screen-lay5 in a%reements amon% shareholders o a closely held com-any or in an interest in a

"usiness. t mi%ht also coer "usiness transactions that are not strictly assets5 such as the ri%ht

to enter into a ;oin enture5 a distri"ution a%reement or mana%ement a%reement. For instance5

in the entertainment industry5 a ri%ht o irst reusal on a conce-t or a screen-lay would %ie

#2nforceability of provisions not formin! part of the company documents3 ,n analysis in thelaw5 S, 7 Cor-orate !aw :ee$ly ssue5 Se-tem"er ##5 #009

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the holder the ri%ht5 assumin%ly5 to ma$e that moie irst. nly i the holder turns it down

may the owner then sho- it around to other -arties.

Ta$in% the a"oe into consideration5 it may "e noted that the aorementioned ri%ht is ramed

so as to enorce the interests o the inestors and the -romotersB current shareholders in a

-articular enture. Considerin% the same5 it would "e a utile e>ercise i the enorcea"ility o

the said ri%ht is not $nown to the -arties to such a%reements.

PRE1EMPTIERIGHT

As com-ared to /F/5 there is an almost similar ri%ht which is $nown as a -re+em-tie

ri%ht. t may not "e easy -ro-osition to dierentiate "etween the /F/ and the -re+em-tie

ri%hts5 as the two seem to "e similar5 i not identical. Contrary to a ri%ht o irst reusal5 a -re+

em-tie ri%ht a--ears to "e similar to & r.$# o* *r%# o**"r. A /i%ht o irst oer is a close

cousin to the ri%ht o the irst reusal. U(!"r #$" r.$# o* *r%# o**"r ,"*or" &( o("r 5&(

%"'' prop"r#6 %+,7"5# #o & r.$# o* *r%# o**"r #$" r.$# $o'!"r )+%# ," .v"( #$" 5$&(5" #o

)&8" &( o**"r *or #$" prop"r#69 T$" o("r 5&( #$"( "#$"r &55"p# #$" o**"r or #$" o("r

5&( %"'' #$" prop"r#6 #o & #$r! p&r#6 ,+# o('6 & pr5" &,ov" #$" o(" o**"r"! ,6 #$"

r.$# $o'!"r9For this ri%ht to "e eectie and enorcea"le5 in the case o -riate com-any5

the same may "e inserted in the Articles o Association o the Com-any. As -er the said ri%ht5

the ri%ht to transer shares to non+mem"ers is restricted. Further5 it is worthwhile to note that

a -riate a%reement "etween two or more shareholders in which they im-ose restrictions

u-on each other as to their ri%ht o transer does not "ind the com-any and5 conse=uently5 the

same is li$ely to "e a su";ect matter o a ciil suit "etween the -arties to the a%reement and

the -arty committin% "reach may hae to answer in terms o dama%es to the other. To "ind

the com-any5 the a%reement has to include the com-any as one o the -arties5 and it has to "e

a su";ect matter in the Articles o Association.&

& *upranote 1

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BACKGROUND

The discussion on this su";ect "e%an in the year 133# when the Su-reme Court in the case oV.B.Rangaraj v. V.B.Gopalakrishnan4held that in case o a -riate limited com-any transer

restrictions5 i any5 a%reed "y the shareholders unless em"odied into the articles o association

would not "e alid and "indin%. n the other hand5 the elhi 4i%h Court and the Com-any

!aw oard held that in case o listed shares there cannot "e any restrictions namely ri%hts o

irst reusal or any such ri%hts. This was "ecause Section 111A (#)o the Com-anies Act

1365 -roides that the shares and de"entures and any interest therein o a com-any shall "e

reely transera"le. 2ustice Chandrachud o the om"ay 4i%h Court also too$ the same iew

in #010 in the case o Western Maharashtra Development Corporation v. Bajaj Auto Ltd

and o"sered that @the -rinci-le o ree transera"ility must "e %ien a "road dimension in

order to ulil the o";ect o the law. m-osin% restrictions on the -rinci-le o ree

transera"ility is a le%islatie unction5 sim-ly "ecause the -ostulate o ree transera"ility

was enunciated as a matter o le%islatie -olicy when *arliament introduced Section 111A

into the Com-anies Act5 136. That is a "indin% -rece-t which %oerns the discourse on

transera"ility o shares. The word @transera"le is o the widest -ossi"le im-ort and

*arliament "y usin% the e>-ression @reely transera"le5 has reinorced the le%islatie intent

o allowin% transers o shares o -u"lic com-anies in a ree and eicient domain. The eect

o a clause o -re+em-tion is to im-ose a restriction on the ree transera"ility o the shares "y

su";ectin% the norms o transera"ility laid down in Section 111A to a -re+em-tie ri%ht

created "y the a%reement "etween the -arties. This is im-ermissi"le.

This inter-retation was causin% lot o hardshi- on the *, inestors B Strate%ic *artners in

ne%otiatin% the ri%ht o irst reusal or ta% B dra% ri%hts with the *romoters5 which arety-ically e>it o-tions ne%otiated to -rotect their commercial interest. Huestion thereore was

' 4 5 an!araj v. 4 5 6opala&rishnan5 I1331J 6 C!A #11

Section 111A (#) o Com-anies Act5 136D Su";ect to the -roisions o this section5 the

shares or de"entures and any interest therein o a com-any shall "e reely transera"le.

6 (#010) 1' Com-Cas 3& (om)

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whether in a listed com-any one can alidly oer ri%ht o irst reusal or ta%Bdra% alon% ri%hts

that would ultimately "e le%ally enorcea"le

The aoresaid decisions came u- or consideration "eore the iision "ench o the om"ay

4i%h Court in case oMesser !oldings Limited v. "h#am Madanmohan Ruia and $rs%. The

;ud%ment is interestin% as it comes in the wa$e o the om"ay 4i%h Court ;ud%ment in a;a;

Auto case9Eit chan%ed the way to ne%otiate restriction on transer o shares in a -u"lic

com-any. That ;ud%ment had ruled that any -re+em-tie ri%hts oer shares in -u"lic limited

com-anies were ille%al in iew o the -rinci-le o @ree transera"ility enshrined in Section

111A o the Com-anies Act5 136. The de"ate on enorcea"ility o terms o shareholder

a%reements %oernin% -u"lic limited com-anies is deinitely not oer yet.

The Court with res-ect re;ected the earlier inter-retation %ien to the words @ree

transera"le used in section 111A "y the sin%le 2ud%e in the a;a; Auto case3. The iision

"ench or the irst time e>amined the true intent o section 111A5 the reason or its insertion

in the Com-anies Act5 136 and o"sered that earlier when the shares were in -hysical orm5

"oard o directors used ar"itrary -owers to re;ect transer o shares leadin% to lot o

com-laints "y the transerees. That situation was -artially remedied "y insertion o section

##A o the Securities Contract /e%ulation Act5 which laid down only our %rounds on which

any "oard could re;ect transers. :ith the introduction o the conce-t o dematerialiLed shares

throu%h the e-ositories Act5 13365 section ##A %ot deleted and section 111A was introduced

in the Com-anies Act to deal with rectiication o re%ister. T$" Co+r# o,%"rv"! #$ #$"

$o'" p+rpo%" o* %"5#o( ===A % #o r".+'" #$" r.$# o* #$" ,o&r! o* !r"5#or% #o r"*+%"

#r&(%*"r o* %$&r"%9nder Section 111+A5 the Com-any !aw oard has "een em-owered to

direct any de-ository or com-any to rectiy its re%ister or records on an a--lication made to it

"y a de-ository5 com-any5 -artici-ant or inestor or S,.10

7esser +oldin!s Ltd. v. *hyam 7adanmohan uia I#010J 39 C!A

9 8estern 7aharashtra 9evelopment Corporation v. 5ajaj ,uto Ltd.5 (#010) 1' Com-Cas

3& (om)

3Ibid.

10 A /amaiya5 6uide to the Companies ,ct5 1

th

edn.5 #0105 *art 15 !e>is 8e>isutterworths5 :adhwa5 8a%-ur

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JUDICIALPRECEDENTS

HIGHCOURTSVIEW

&9 J+!.)"(#% ( *&vo+r o* ROFR%

i. Ma&atlal 'ndustries Ltd. v. Gujarat Gas Co. Ltd9


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4on?"le Court that -re+em-tie ri%hts arise out o a -riate contract "etween shareholders

with a third -arty and these need not "e em"odied in the articles o association o the

com-any since the com-any is not a -arty to such arran%ements.1#

,9 J+!.)"(#% (o# ( *&vo+r o* ROFR%

9 (ushpa )ato*h v. Manu Maharani !otels Limited

elhi 4i%h Court has held that there could not "e any etters on the ri%ht o a shareholder to

transer hisBher shares in a -u"lic com-any. t was s-eciically held that -re+em-tie ri%hts

are unenorcea"le een i incor-orated in the articles o association5 since such ri%hts would

"e ultra ires to Section 111+A.1&

9 Western Maharashtra Development Corporation Ltd. v. Bajaj Auto Ltd

om"ay 4i%h Court relied on *ush-a Katoch and held /F/s to "e -atently ille%al. t held

that -re+em-tie ri%hts %o a%ainst the s-irit o Section 111+A5 and thereore are not le%ally

tena"le. Sin%le 2ud%e o the om"ay 4i%h Court held that the -rinci-le o ree transera"ility

must "e %ien a "road dimension in order to ulil the o";ect o the law. The word

@transera"le is o the widest -ossi"le im-ort and *arliament "y usin% the e>-ression @reely

transera"le5 has reinorced the le%islatie intent o allowin% transers o shares o -u"liccom-anies in a ree and eicient domain. The Court urther held that the A%reement and

-roision in Articles o Association restrictin% the transer shares is iolatie o section 111A

read with section 3 o the Com-anies Act and thereore it is oid and accordin%ly the award is

contrary to su"stantie -roisions o law and is -atently ille%al.1'

SUPREMECOURTSVIEW

a) 9B9 R&(.&r&7 v9 9B9 Gop&'&8r%$(&(=/

1# *upra note

1&:ushpa ;atoch v. 7anu 7aharani +otels Limited5 #006 (1&1) Com-Cas '# el

1' 8estern 7aharashtra 9evelopment Corporation Ltd. v. 5ajaj ,uto Ltd5 (#010) 1' Com-

Cas 3& (om)

1 A/ 133# SC '&

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n this Case shareholders o a -riate limited com-any were two "ranch o amily and it was

a%reed orally in 1315 it means in "ac$dro- o nde-endence and -artition5 that the -ro-ortion

o the shareholdin% o res-ectie "ranches would not chan%e5 and urther a%reed that or this

-ur-ose5 any mem"er o a "ranch want to sell his shares must irst oer the share to his own

"ranch. The cru> in this case is the oral a%reement a"out restriction was not incor-orate in

Articles. /eerrin% its own earlier releant decision in Kalin%a Tu"es5 the Su-reme Court

held that the shares are @reely transera"le and that a -riate a%reement im-osin%

restriction on transer o shares which is not sti-ulated in Articles o association is neither

"indin% to the Com-any nor to shareholders. t means such $ind o a%reement is oid in toto.

ne thin% ery clearly esta"lished in this case is any restriction on share transer must "e

incor-orated in the Articles o the Com-any otherwise it will not hae any eect and

a%%rieed shareholder can not hae any le%al remedy a%ainst iolation o such restrictie

-roisions o a%reement or understandin%.

The Su-reme Court held that a restriction on the transer o shares contrary to the articles o

association o a -riate com-any was not "indin% on the -riate com-any or its shareholders.

Althou%h this ;ud%ment was in relation to a -riate com-any5 its reasonin% has also "een

a--lied to -u"lic com-anies. Thereore5 i restrictions on transer o shares are to "e

enorcea"le5 -roisions in the articles o association o a com-any are needed. The Court hadta$en the iew that -roisions o the S4A im-osin% restrictions een when consistent with

com-any law are to "e authoriLed only when they are incor-orated in the articles o

association.

") o!&*o(" I(#"r(o(&' Ho'!(.% B99 v9 U(o( O* I(!& &(! &(o#$"r=

The Court has ta$en a iew that reedom o contract can "e restricted "y law only in cases

where it is or some %ood o the community. The Com-anies Act5 1365 or the other

le%islations do not e>-licitly or im-liedly or"id shareholders o a com-any to enter into

a%reements as to how they should e>ercise otin% ri%hts attached to their shares.

n this case the Su-reme Court did not su"scri"e with the iew ta$en in the /an%ara; case (as

stated a"oe) and stated that S4A is a -riate contract "etween the shareholders com-ared to

the articles o association o the com-any5 which is a -u"lic document. S4A is essentially a

16 #01# (1) 2 &&'

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contract "etween some or all other shareholders in a com-any5 the -ur-ose o which is to

coner ri%hts and im-ose o"li%ations oer and a"oe those -roided "y the com-any law.

Further5 the Court stated that the -roisions o the S4A incor-oratin% /F/s need not

necessarily "e authoriLed "y the articles o association o the concerned com-any.

Accordin%ly5 the Court has im-lied that in the eent the articles o association o a com-any

are silent with re%ards the -roision o /F/?s5 they can "e le%ally enorcea"le5 su";ect to

the same "ein% incor-orated in the S4A.

CURRENTPOSITIONININDIA

/ecently on the cto"er &5 #01& a 8otiication1was issued "y S, (Securities ,>chan%e

oard o ndia)5 which said that /i%ht o First /eusal was le%ally allowed and alid in the

Shareholders A%reement. t also allowed ta% alon% and dra% alon% ri%hts. Throu%h this5 S,

has rescinded its -reious notiication o March 15 #000 that -rohi"ited contracts other than

s-ot deliery contracts or those entered into throu%h the stoc$ e>chan%e mechanism.

Accordin%ly5 S, now -ermits arious ty-es o -re+em-tion ri%hts and -ut and call o-tions5

"ut su";ect to certain conditions. The new -osition is as ollowsD

1. S-ot deliery contracts are -ermitted5 consistent with the -reious -ositionE

#. Sale and -urchase contracts on securities are -ermitted so lon% as they are in accordance

with securities re%ulations and stoc$ e>chan%e re%ulations and "y+laws. These would include

transactions5 includin% in deriaties5 which are carried out throu%h the stoc$ e>chan%e.

&. Contracts or -re+em-tion includin% ri%ht o irst reusal (/F/) or ta%+alon% or dra%+

alon% ri%hts contained in shareholders a%reements or articles o association are allowed. 8ote

that this is only an inclusie -roision and is not e>haustie o all the ty-es o -roisions in

the a%reements or articles that can "e enorced. This ena"les inestors to e>ercise their e>it

ri%hts in com-anies throu%h the a"oe mechanisms that are %enerally reco%niLed. 8o

conditions are attached or the e>ercise o these ri%hts.

1 The traordinary5 *art 5 S, 8otiication (Mum"ai)5 &

rd

cto"er5#01&

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'. *ut and call o-tions contained in shareholders a%reements or articles o association are

treated somewhat dierently rom -re+em-tion ri%hts discussed in item & a"oe. The reason

is that the e>ercise o o-tions is su";ect to certain conditionsD

a) The underlyin% securities that are the su";ect matter o the o-tions must hae "een

held "y the releant -arty or a minimum -eriod o 1 year rom the date o enterin%

into the o-tion contract. This seems to "e to ensure that o-tions are not short+term in

nature and are -ermitted only when the holdin% o the securities is or a considera"le

-eriod o time. The %enesis or the erstwhile -rohi"ition on o-tions was to -reent

s-eculation in securities5 and this a--roach is im-osin% a minimum 1+year term on the

o-tions is consistent with that -hiloso-hy.

") The -ricin% o the o-tions and the e>ercise is to com-ly with a--lica"le laws. More

s-eciically5 the notiication states that all contracts -ermitted throu%h it must com-ly

with the -roisions o the Forei%n ,>chan%e Mana%ement Act5 1333. This a--lies

when o-tions and -re+em-tion ri%hts are %ranted "y or in aour o a non+resident

inestor. :here the e>ercise o the o-tion or -re+em-tion results in a transer o

securities "etween a resident and a non+resident inestor5 then the idea is that the

releant -ricin% norms im-osed "y the /esere an$ o ndia (/) must "e com-lied

with. This is si%niicant or orei%n inestors to ta$e into account. Merely "ecause

S, has now conditionally -ermitted o-tions5 it does not mean that -arties hae

com-lete reedom in e>ercisin% the o-tions. The -ricin% is still re%ulated "y the

releant / norms5 and hence the commercial understandin% "etween the -arties

re%ardin% the e>ercise -rice will "e su";ect to these re%ulatory constraints.

c) The new -ermissi"le re%ime a--lies only to -hysically+settled o-tions where there is

an actual deliery o the underlyin% securities. t does not coer cash+settled o-tions5

which are essentially contracts or dierences. This is understanda"le %ien the

-hiloso-hy o the le%al re%ime to cur" s-eculation. Moreoer5 inestment a%reements

(where inestors see$ e>it ri%hts) usually relate to an actual sale or -urchase o

securities rather than a contract or dierences5 and hence this should not -ose

diiculties or customary inestment transactions.

. This new -ermissi"le le%al re%ime a--lies only -ros-ectiely5 and does not @aect or

alidate any contract which has "een entered into -rior to the date o the notiication.

4ence5 -ast contracts with -re+em-tion ri%hts or -ut and call o-tions will not "e

@%randathered. ne -ossi"ility to oercome this restriction would "e or -arties to

e>istin% contracts to re+e>ecute them as o a uture date.

*a%e =4o 30


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6. Finally5 an e>-lanation to the notiication states that the contracts s-eciied in the

notiication would "e alid without re%ard to anythin% contained in section 19A19o the

Securities Contracts (/e%ulation) Act5 1365 which reers to e>chan%e traded contracts.

n other words5 such -re+em-tion ri%hts and o-tion contracts would "e -ermissi"le een

thou%h they are entered into on an oer+the+counter (TC) "asis and not traded on the

stoc$ e>chan%e.

erall5 S,?s notiication re-resents a momentous re%ulatory chan%e. Com-anies5

inestors and their adisors hae "een %ra--lin% with concerns re%ardin% the enorcea"ility o

-re+em-tion ri%hts and o-tions or nearly two decades now. The oddity o the situation was

the e>-ansie a--lication o S,?s -reious re%ime that a--lied not only to listed com-anies

"ut also to unlisted -u"lic com-anies. Moreoer5 while s-eculation was the concern5 it

seemed to encom-ass %enuine transactions as well5 ma$in% customary inestment

transactions ineicient in terms o structurin% (-articularly o e>it o-tions).

The current moe is welcome as it rectiies a -reiously am"ialent and restrictie le%al

re%ime. This will au%ur well to inestors as well as com-anies re=uirin% ca-ital. There may

ery well "e issues re%ardin% the s-eciics o the recent notiication and the conditions

im-osed therein5 "ut the oerall deelo-ment is -ositie in nature.13

PROISIONUNDERTHECOMPANIESACT =>/

ne o the most controersial =uestions raised and still "ein% am"ialent isD

Whether R$+R agreements, -ag along and Drag along rights are en&or*eale under la/

and in *omplian*e /ith se*tion 000A o& the Companies A*t, 0123

t is -ertinent to hi%hli%ht that this -oint is no lon%er /es nte%ra (untouched)5 "ut is coered

"y the decision o the Su-reme Court in the cele"rated case o V.B.Rangaraj v.

19 Section 19AD 8otwithstandin% anythin% contained in any other law or the time "ein% in

orce5 contracts in deriatie shall "e le%al and alid i such contracts are+ (a) traded on a

reco%nised stoc$ e>chan%eE (") settled on the clearin% house o the reco%nised stoc$

e>chan%e5 in accordance with the rules and "ye+laws o such stoc$ e>chan%e.

13 *upranote 1

*a%e =/o 30


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V.B.Gopalakrishnan5. n the said case5 the A-e> Court has held that a restriction which is

not s-eciied in the Articles o Association is not "indin% either on the Com-any or on the

shareholders. The court urther held that the arran%ement (as in the said case) im-osed

additional restrictions on the mem"er?s ri%ht o transer o his shares which were not

sti-ulated in the articles and5 thereore5 were not "indin% either on the shareholders or on the

com-any. t was also held that the shares are moa"le -ro-erty and transer thereo is

re%ulated "y the articles o association o the Com-any. The Court held that een i the

Articles o Association -roide or a /F/5 i the ri%ht is a restriction on the ree

transera"ility o shares and not a mere -rocess5 then it is not li$ely to "e enorcea"le.

!ater the 2udicial iew -oint decided in #010 in the case oMesser !oldings Limited v.

"h#am Madanmohan Ruia and $rs.0

5 A iision ench o the om"ay 4i%h Court had

ruled in this case that a -riate arran%ement "etween shareholders o a -u"lic limited

com-any on a oluntary "asis relatin% to share transer restrictions (ri%ht o irst reusal) is

not iolatie o Section 111A o the Com-anies Act5 136. The ;ud%ment also %oes on to

su%%est that it is not mandatory or the Com-any to "e a -arty to such an a%reement relatin%

to share transer restrictions and it is not necessary to incor-orate share transer restrictions in

the articles o association o the Com-any.

Shareholders can enter into a consensual a%reement in case o shares o -u"lic com-anies5

can also reely ne%otiate and enter into a%reement containin% the /F/ or what is commonly

$nown as *re+em-tionB Ta% Alon%B ra% Alon% ri%hts een in the case o listed shares5 which

was recently conirmed "y the iision "ench o A.M. Khanwil$ar and A.A. Sayed5 22. o the

om"ay 4i%h Courts. These Share *urchase A%reement (S*A) are usually assent "etween the

*romoters5 *, nestors5 Technical or Financial Colla"orators.

The decision in the case o7esser +oldin!-roided some relie to shareholders o a -u"lic

com-any howeer not resoled issues and concerns o cor-orates and ;oint enture -arties.

ut some =uestions yet to ind their stands. :ithout a com-any "ein% a -arty to the

a%reement "etween the shareholders5 its terms cannot "e inserted in to Articles and een in

case it is incor-orated in the Articles5 the alidity o restriction on share transer in a -u"lic

com-any would not "e sustained and u-hold loo$in% the decisions deliered so ar. n such

#0 *upranote '

#1 *upranote

*a%e =o 30


17/30

circumstances5 since shareholders a%reement is not "idin% to a Com-any5 a shareholder

cannot restrict the com-any rom transerrin% shares which is in iolation o the a%reement.

nless and until the role o the com-any and such restrictions alidly ind the -lace in

Articles5 Com-any !aw oard would not hae ;urisdiction or ciil "reach. Thereore remedy

aaila"le or a%%rieed shareholder is to a--roach ciil court5 which is costly and len%thy and

many times -arties reluctant to -reer it in ;oint enture "usiness##.An in+de-th analysis o

the aorementioned case is re=uired as it is the most recent decision on the -oint in issue.

MESSERHOLDINGSLIMITEDV.SH?AMMADANMOHANRUIAANDORS9

The acts in "rie5 om"ay >y%en !td is deendant no. # com-any was listed on S,.

Messer holdin% was the ma;or shareholder o the Com-any. t entered into a%reement dated

2une #&5 133 where under the ce-t some situation as

-roided in the a%reement. n this case5 the ar%uments were (a) the a%reement was oid

"ecause o raud and misre-resentation (") the a%reement was oid "ecause it was in

iolation o S, rules and re%ulation and (c) the a%reement was oid as it restrict ree

transera"ility in term o section 111A o the Com-anies Act and recent decision o om"ay

4i%h Court in the case o a;a; Auto.

Clause 6.1 o the S*A dated 2une #&5 133 "etween the -arties conerred a ri%ht o irst

reusal on the /uias in res-ect o the shares o om"ay >y%en !td.5 unless the shares were

to "e sold to a mem"er o the 4oechst %rou- o com-anies.

The controllin% shareholders o om"ay >y%en !td5 a -u"lic listed com-any a%reed to

diest a ma;ority o their shareholdin% to Messer


18/30

issues5 we analyLe the issue -ertainin% to the le%ality o Clause 6.1 o the S*A and whether

the same is iolatie o ree transera"ility o shares in a -u"lic com-any -roided "y Section

111 A o the Act. M-ression

reely transera"le in Section 111A o the Act does not mean that the shareholder cannot enter

into consensual arran%ementsBa%reement with the third -arty (-ro-osed transeree) in relation

to his s-eciic shares.

The conce-t o ree transera"ility o shares o a -u"lic com-any is not aected in any

manner i the shareholder e>-resses his willin%ness to sell the shares held "y him to another

-arty with ri%ht o irst -urchase (-re+ em-tion) at the -reailin% mar$et -rice at the releant

time. So lon% as the mem"er a%rees to -ay such -reailin% mar$et -rice and a"ides "y other

#& *upranote 9

*a%e =


19/30

sti-ulations in the Act5 /ules and Articles o Association there can "e no iolation. For the

sa$e o ree transera"ility "oth the seller and -urchaser must a%ree to the terms o sale.

Freedom to -urchase cannot mean an o"li%ation on the shareholder to sell his shares.

/eliance was also -laced on Section 3 o the Com-anies Act5 136 which sti-ulates that

-roisions o the Act shall hae the eect notwithstandin% anythin% to the contrary contained

in the Memorandum or Articles o the Association.

The decision inM.".Madhusoodhanan v. )erela )amaudi (vt. Ltd.4% &( &+#$or#6 o( #$"

propo%#o( #$ 5o(%"(%+&' &.r"")"(#% ,"#""( p&r#5+'&r %$&r"$o'!"r% r"'(. #o

#$"r %p"5*5 %$&r"% !o (o# )po%" r"%#r5#o( o( #$" #r&(%*"r&,'#6 o* %$&r"%9Further5

such consensual a%reements "etween -articular shareholders relatin% to their shares can "e

enorced li$e any other a%reements. t was not re=uired to "e em"odied in the Articles o

Association. The iision ench also relied on the distinction drawn "y the Su-reme Court

in7adhusoodhanancase rom the -ro-osition laid down in the case o 4.5 an!araj5 in that

the ;ud%ment arried at "y the Su-reme Court was on account o the restriction "ein% a

"lan$et restriction on all the shareholders -resent and uture and could not "e im-orted to a

-riate a%reement "etween -articular shareholders.

The eendant too relied on a ew ;ud%ments "ut it was also o"sered "y the !earned Sin%le2ud%e that the dictum in the relied decisions were o no aail as the case on hand was in

relation to a -u"lic com-any whereas the decisions in those res-ectie ;ud%ments are in

concern with the *riate Com-any under which the transera"ility o shares in restricted. t is

held that in case o -u"lic com-any5 Section 111A -roides that the shares or de"entures and

any interest therein o the com-any shall "e reely transera"le.

As aoresaid5 Section 111A is not a law dealin% with the ri%ht o the shareholders to enter into

consensual arran%ementBa%reement "y way o -led%e5 -re+em-tionBsale or otherwise. that

ri%ht is not coered "y Section 111A o the Act as has "een ound "y us5 then consensual

arran%ementBa%reement "etween shareholder and third -arty or shareholders inter se to which

com-any is not a -arty5 Section 3 o the Act will not come into -lay at all. Thus5 the

e>-ression @reely transera"le in Section 111A does not mean that the shareholder cannot

enter into consensual arran%ementBa%reement with the third -arty (-ro-osed transeree) in

relation to his s-eciic shares the com-any wants to een -rohi"it that ri%ht o the

#'7.*.7adhusoodhanan v. ;erela ;amaudi :vt. Ltd.5 (#00&) 11 Com-Cas 13 SC

*a%e =>o 30


20/30

shareholders5 may hae to -roide or an e>-ress condition in the Articles o Association or in

the Act and /ules5 as the case may "e5 in that "ehal. The le%al -roision as o"tained in the

orm o Section 111A o the Com-anies Act does not e>-ressly restrict or ta$e away the ri%ht

o shareholders to enter into consensual arran%ementBa%reement in res-ect o shares held "y

him.#

ANALYSIS

(a) This diision "ench has %one into the intent o 111A. The diision "ench has ri%htly held

now that when shares are reely transera"le doesn?t mean that the shareholders lose the ri%ht

to dis-ose o or deal with the shares in the manner in which they li$e.

(") The ench has e>-lained the intent that the section 111A was neer incor-orated to ta$e

away the ri%hts o the shareholders to dis-ose5 which is one o the ri%hts en;oyed "y any

owner o any moa"le -ro-erty. /F/ and other such a%reements are im-ortant e>it

-roisions or any inancial or strate%ic inestor.

(c) This may not "e the last word "ecause this controersy may $noc$ the doors o the

Su-reme court5 "ut certainly it?s a diision "ench ;ud%ment and is the only ;ud%ment in the

case o a -u"lic com-anies o 111 (A) thereore in that sense it certainly it sets aside the

controersy which was raised ri%ht rom the "e%innin% o /an%ara;an rom 133#.

PROISIONUNDERTHECOMPANIESACT 20=3

8o ;ud%ments hae "een cited here5 as it has "een een ' months rom now5 when the act

came into orce. This does not means we should or%et old Com-anies Act5 136 which will

"e a--lica"le or some time and we hae to come "ac$ or to it in -racticeE or orensic or

other historic -ur-ose.

# Somase$har Sundaresan5 @:ublic Company shares cannot be fettered at all5 Aaila"le atDhtt-DBBindiacor-law."lo%s-ot.inB#010B0#B-u"lic+com-any+shares+cannot+"e.html

*a%e 20o 30
http://indiacorplaw.blogspot.in/2010/02/public-company-shares-cannot-be.htmlhttp://indiacorplaw.blogspot.in/2010/02/public-company-shares-cannot-be.html


21/30


22/30

shall not "e less than ten thousand ru-ees "ut which may e>tend to one la$h ru-ees lia"le

under section '' o the Act.

P+(%$)"(# *or p"r%o(o( o* %$&r"$o'!"r S"5#o( /;

any -erson deceitully -ersonates as an owner o any security or interest in a com-any5 or

o any share warrant or cou-on issued in -ursuance o this Act5 and there"y o"tains or

attem-ts to o"tain any such security or interest or any such share warrant or cou-on5 or

receies or attem-ts to receie any money due to any such owner5 he shall "e -unisha"le with

im-risonment or a term which shall not "e less than one year "ut which may e>tend to three

years and with ine which shall not "e less than one la$h ru-ees "ut which may e>tend to ie

la$h ru-ees.

Sim-ly5 any -erson5 who deceitully re-resent himsel as holder o any security or interest in

a com-any shall "e -unisha"le with im-risonment and with ine5 minimum ine "ein% one

la$h ru-ees.

RESTRICTIONSONTHETRANSFERABILIT?OFSHARESINPUBLICAND

PRIATECOMPANIES

nMesser !olding v. "h#am Madanmohan Ruia5 The 2ud%e o"sere that @a situation

inolin% a restriction o transera"ility o shares in a -riate com-any has to "e contrasted

with cases inolin% -u"lic com-anies where the law -roides or ree transera"ility. t is

thus held that ree transera"ility o shares is the norm in the case o shares in a -u"lic

com-any.

*riate limited com-any occu-ies a uni=ue -osition in the scheme o the com-any law. t

en;oys seeral -riile%es and e>em-tions as o--osed to a -u"lic com-any. t is immune rom

a num"er o restrictions5 controls and re%ulations5 which a -u"lic com-any is su";ected to. t

has the character o close cor-oration?. The most ital -riile%e a -riate com-any en;oys is

lesser %oernmental control and intererence. t is a "lend o -artnershi- and a limited

lia"ility "ody cor-orate. t en;oys the "eneits and adanta%es o "oth.

*a%e 22o 30


23/30

Section &(1) (iii) o the Com-anies Act5 136 deines -riate com-any?#95and sti-ulates our

in%redients that constitute a com-any as a -riate com-any. ne o the our in%redients o the

deinition is that a -riate com-any5 "y its articles5 restricts the ri%ht to transer its shares.

Any restrictions im-osed "y the articles are "indin% u-on the mem"ers o the com-any "y

irtue o Section &6#3o the Act. To what e>tent and in what orm the ri%ht to transer can "e

restricted has "een let to the discretion o these com-anies5 the Act does not -roides any

direction in this re%ard. 4oweer5 conentionally5 certain common restrictie -roisions are

ound in the articles o most -riate com-anies.

Two chie ones o them areD one5 the directors are %ien a"solute and uncontrolled discretion

in the matter o a--roal o transers or re%istration5 and second5 the mem"ers are %ien the

ri%ht o -re+em-tion or -urchasin% the shares oered "y any mem"er. There is5 howeer5

nothin% to limit the restrictions which a com-any?s articles may -lace on the ri%ht o transerE

"ut there cannot "e com-lete etter on the ri%ht.

Althou%h -riate com-anies are ree to im-ose any restrictions5 howeer in character5 on the

ri%hts o transer and -rescri"e any manner in which the shares can "e transerred5 yet the

mandatory -roisions o Section 109 o the Act are as much a--lica"le to the transers o

shares o -riate com-anies as they a--ly to -u"lic com-anies. Furthermore5 the articles

layin% down the manner o transers are e=ually "indin% u-on the mem"ers and the com-any

as well.

t should "e noted that5 as held "y the Su-reme Court V. B. Rangaraj v. V. B. Gopalkrishnan5

the articles o a -riate com-any may contain -roisions restrictin% the ri%ht to transer o

shares5 "ut any restriction outside the articles (e.%.5 a -riate a%reement "etween the

shareholders) is ino-eratie and unenorcea"le. The only restriction on the transer o shares

o a com-any is as laid down in the articles. A restriction which is not s-eciied5 is not

"indin% either on the com-any or on the shareholders. Thus5 an a%reement restrictin% the ri%ht

to transer5 contrary to or inconsistent with the -roisions in the articles5 is not enorcea"le.

#9 eined under Section #(69) o The Com-anies Act5 #01&

#3 Section &6(1) o The Com-anies Act5 136 D ,ect o memorandum and articles as mentioned "elowD Su";ectto the -roisions o this Act5 the memorandum and articles shall5 when re%istered5 "ind the com-any and themem"ers thereo to the same e>tent as i they res-ectiely had "een si%ned "y the com-any and "y eachmem"er5 and contained coenants on its and his -art to o"sere all the -roisions o the memorandum and o the

articles.

*a%e 23o 30


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THERIGHTOFFIRSTREFUSALSTILLREMAINSASIGNIFICANTUNRESOLED

CONTROERS?ININDIANCORPORATELAW

/F/s are le%ally enorcea"le as -er the latest diision "ench o the om"ay 4i%h Court.

Accordin%ly Ta%B ra% and similar coenants can also "e considered as enorcea"le "etween

the shareholders a%reein% or such coenants. As on date this is the inal erdict on /F/ as

it is a iision ench decision. Oes it could %et challen%ed in the Su-reme Court5 "ut it is

hi%hly unli$ely that it would %et reersed. And hence this should remain as a %ood law. The

said ;ud%ment may -roide relie to the -riate e=uity inestors re%ardin% enorcea"ility o

their ri%hts culminatin% rom the -riate arran%ements entered into "y them.

ut this inter-retation "y the om"ay 4i%h Court mi%ht "e a "arrier to im-lement as it will

"e ery diicult or the listed com-anies to raise ca-ital5 as they will hae to oer their

shares to the e>istin% shareholders wheneer they wish to raise ca-ital5 they will hae to oer

it to all the e>istin% share holders as such -roision will "e incor-orated in the article o

association5 or instance5 a com-any hain% #00 share holders5 the com-any who is need

o share ca-ital will hae to "eore raisin% the ca-ital5 as$ all the e>istin% #00 shareholders5

and only i they reuse can the com-any %o or the e>ternal sources or hel-.

Thou%h the dratsmen hae enumerated a -roision re%ardin% this in the #01& act5 it would "e

curious to see the a--lication o the same in the uture5 $ee-in% in iew the S, %uidelines &0

issued which said /F/ was le%ally allowed and alid in the Shareholders A%reement. Also

allowed ta% alon% and dra% alon% ri%hts. Throu%h this5 S, has rescinded its -reious

notiication o March 15 #000 that -rohi"ited contracts other than s-ot deliery contracts or

those entered into throu%h the stoc$ e>chan%e mechanism.

Ater all the said laws and decisions %ien "y the arious courts5 it is "elieed that these

-roisions and -reerential clauses shall not "e allowed in the a%reements as the sti-ulates

that -roisions o the Act shall hae the eect notwithstandin% anythin% to the contrary

contained in the Memorandum or Articles o the Association&15 and "y a--lyin% these ri%hts

&0 S, 8otiication on *re+,m-tion /i%hts5 *ut and Call -tions5 ssued on cto"er '5

#01&

&1 Section 3 o the Com-anies Act5 136

*a%e 24o 30


25/30

the Section 111A o the Com-anies Act5 136 (which mandates that there can "e no

restriction whatsoeer on the transera"ility o shares in a -u"lic com-any) %ets iolated and

should not "e a--lied at the cost o the statutory laws and or the sa$e o satisyin% the

e>istin% shareholders.

:hile the recent ;ud%ment o Messers 4oldin%s oers strate%ic inestors the much+needed

re-riee5 le%al e>-erts "eliee that some cor-orates are li$ely to $noc$ on the doors o the

Su-reme Court loo$in% or clarity since it has %reat im-act on arious ;oint enture

a%reements across cor-orate ndia.

A S-ecial !eae *etition&&challen%in% the ;ud%ment o the om"ay 4i%h Court in Messer

4oldin%s is -resently -endin% "eore the Su-reme Court. This is a welcome o--ortunity or

the Court to em-hasiLe once and or all that there is nothin% in ndian or ,n%lish le%islation

or case law that ma$es ineectie a -romise "y one contractin% -arty to another in relation to

the dis-osition o his shares in a com-any5 whether -u"lic or -riate.

CONCLUSION

At this -oint it may "e interestin% to ta$e note o the act that The Com-anies Act5 1365

which is a--lica"le to shareholders o all ndian Com-anies5 The Forei%n ,>chan%e

/e%ulation Act5 13& which encom-asses inestment made in ndian Com-anies "y -ersons

resident outside ndia and non ndian -ersons resident in ndia and the istin% le%islations.

Krishna atta5 /i%ht First /eusal5 Cor-orate !aw /e-orter *art '5 ecem"er &5 #01&5

-.'5 Aaila"le atD htt-DBBcor-oratelawre-orter.comB#01&B1#B0&Bri%ht+irst+reusal+contractual+

restriction+transer+sharesB

&& S!* (C) &&'#3+&&'&' o #010

&' Tony Khindria, Scope and Enforceability of Shareholders Agreements, International Business Law Journal,Vol. 2, 1995, pp. 261-271

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t may then "e wisely ar%ued that as lon% as any -roision in the a%reement does not deeat

the -ur-ose o an e>istin% statute5 the same must receie alid reco%nition under the law. n

act5 the Su-reme Court itsel in the cele"rated case o Gherulal (arekh v. Mahadeo Das62

has clearly ruled that the reedom o contract can "e restricted "y law only in cases where it is

incontesta"ly or the esta"lished %ood o the community and courts cannot ino$e new heads

o -u"lic -olicy.&6The court also stated that thou%h sanctity o contract is o -aramount

im-ortance5 yet courts may reliee -arties o their duties under the rule ounded on -u"lic

-olicy which e>tend not only to harmul cases "ut also to harmul tendencies.

sin% this ar%ument5 it would not "e ;ustiia"le or courts to stri$e down the alidity o

shareholder a%reements only on the %round that they are inconsistent with the articles o the

com-any5 een thou%h they conorm to the s-irit o law. -arties in the a%reement5 "y

themseles a%ree to waie certain ri%hts and i the same is not deleterious or other -arties to

the a%reement5 then reedom o contract should not "e rele%ated. n modern times5

shareholder?s a%reements hae assumed %reater im-ortance $ee-in% in mind the %rowin%

olume o international commercial transactions entered into "y the ndian Com-anies.

*arties si%n such a%reements with clarity o mind and awareness. n such circumstances5 it is

indeed not air to allow -arties to eade their duties outlined in the a%reement at their own

conenience sim-ly "ecause the law in ndia is still a%ue re%ardin% the same. The law needsto ta$e co%niLance o -ractical situations that arise in real lie and -rotect such a%reements

alon% with the -arties a%ainst whom the "reachin% -arties ma$e use o the -rotection o law

to %et away without ulillin% their share o duties.

Commercially5 restrictions on transer o shares are common and oten orm the "asis o a

-artnershi- or ;oint enture or inestment arran%ements. The Su-reme Court "y way o its

latest Vodaone ;ud%ement has shown inclination towards enorcea"ility o /F/s -roisions

incor-orated in the S4A. 4oweer5 whether the decision in /an%ara; case has "een truly

oerruled or not is still de"ata"le since the -rinci-le o /F/ discussed in the ;ud%ement was

not dealt as a -art o the /atio o the ;ud%ement. 4oweer5 /F/s are iewed as "onaide

arran%ements o commercial nature entered "etween shareholders and in li%ht o the iew

ta$en "y the Su-reme Court in the Vodaone ;ud%ement aorin% the enorcea"ility o /F/

& 133 SC/ Su--l. (#) '06

&6 *riyoma Ma;umdar5 @2nforceability of *hareholder ,!reements in India3 , Le!al:aradox


27/30

-roision in the S4A5 notwithstandin% the same "ein% incor-orated in the articles o the

associations5 seems li$e a chan%e in the mindset o the ndian 2udiciary.

n li%ht o the reised deinitions under Com-anies Act5 #01& and the recent ;ud%ments5 the

le%al -osition with res-ect to alidity o restrictions on transer o shares o a -u"lic com-any

can "e summariLed as underD

+ An a%reement "etween shareholders restrictin% the transer o shares in a -u"lic

com-any does not iolate the le%al mandate o ree transera"ility o shares o a

-u"lic com-anyE

+ /estrictions on transer o shares as aoresaid5 must not "e in iolation o the articles

o association o the -u"lic com-any or the %oernin% lawE

+ Such a%reement restrictin% transer o shares5 can "e enorced as a contract amon%stand a%ainst the shareholders who are -arty theretoE

+ 4oweer5 such contractual restrictions on transer o shares o a -u"lic com-any are

not enorcea"le a%ainst the com-any5 in case the com-any is not a -arty to the

a%reement containin% such restrictions.

BIBLIOGRAPH?

ARTICLES

1. r.K./. Chandratre estrictions on transfer of shares in a private limited company5

Aaila"le atD htt-DBBwww."casonline.or%BarticlesBartin.as-'3

#. 4emant Shah Controversy on *ection , of the Companies ,ct /015 Aaila"le atD

www.hed%e+s=uare.comBw-+contentBu-loadsB#01#B01Bresources'.-d

&. 8itin *otdar5$"s =ow 2nforceable


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6. S. Muralidharan5 8hen shareholders ,!reement is enforceablenion $f India and another5 #01# (1) 2 &&'

*a%e 2


29/30

9. 8estern 7aharashtra 9evelopment Corporation v. 5ajaj ,uto Ltd.5 (#010) 1'

Com-Cas 3& (om)

REPORTS NOTIFICATIONS

1. A"hi;eet Swaru- 7 Vie$ Kumar A%%arwal52nforceability of :rovisions not formin!

part of the Company 9ocuments5 S, 7 C/*/AT, !A:S5 The Cor-orate !aw

:ee$ly5 Vol.965 Se-tem"er ##5 #009

#. aid . :al$er5ethin&in! the i!ht of "irst efusal5 thStanord 2ournal o !aw5

13335 iscussion *a-er 8o. #615 The 4arard !aw School

&. 2nforceability of provisions not formin! part of the company documents3 ,n analysis

in the law5 S, 7 Cor-orate !aw :ee$ly ssue5 Se-tem"er ##5 #009

'. Krishna atta5i!ht $f "irst efusal5 Cor-orate !aw /e-orter *art '5 ecem"er &5

#01&5 -.'5 Aaila"le atD htt-DBBcor-oratelawre-orter.comB#01&B1#B0&Bri%ht+irst+reusal+

contractual+restriction+transer+sharesB

. /e-ort on Com-anies Act5 #01&5 Aaila"le atD htt-DBBaishm%hrana.meBcom-anies+act+

#01&B

6. /e-ort on Com-anies ill5 Aaila"le atD

htt-DBBwww.thehindu.comB"usinessBndustryBcom-anies+"ill+-assedBarticle00&.ece

. S, 8otiication issued on cto"er &5 #01&5 Aaila"le atD

htt-DBBindiacor-law."lo%s-ot.inB#01&B10Bse"i+notiication+on+-re+em-tion+ri%hts.html

9. S, 8otiication on *re+,m-tion /i%hts5 *ut and Call -tions5 ssued on cto"er '5

#01&

3. The traordinary5 *art 5 S, 8otiication (Mum"ai)5 &rdcto"er5

#01&10. Transer and Transmission o Securities (Com-anies Act5 #01&)5 Aaila"le atD

htt-DBBaishm%hrana.meB#01&B10B01Btranser+and+transmission+o+securities+com-anies+

act+#01&B

STATUTES

1. The Com-anies Act5 136

#. The Com-anies Act5 #01&&. The e-ositories Act5 1336

*a%e 2>o 30
http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://aishmghrana.me/companies-act-2013/http://aishmghrana.me/companies-act-2013/http://www.thehindu.com/business/Industry/companies-bill-passed/article5003777.ecehttp://indiacorplaw.blogspot.in/2013/10/sebi-notification-on-pre-emption-rights.htmlhttp://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://aishmghrana.me/companies-act-2013/http://aishmghrana.me/companies-act-2013/http://www.thehindu.com/business/Industry/companies-bill-passed/article5003777.ecehttp://indiacorplaw.blogspot.in/2013/10/sebi-notification-on-pre-emption-rights.htmlhttp://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/


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'. The Securities Contract (/e%ulation) Act5 136

WEBSITES

1. www.manu-atra.com

#. www.indian$anoon.com

&. www.indiancor-law.in

'. www.;stor.or%

. www.lawyersclu"india.com
http://www.manupatra.com/http://www.indiankanoon.com/http://www.indiancorplaw.in/http://www.jstor.org/http://www.lawyersclubindia.com/http://www.manupatra.com/http://www.indiankanoon.com/http://www.indiancorplaw.in/http://www.jstor.org/http://www.lawyersclubindia.com/

Documents

Company Law I Final Project