TagFree Transferability

Dematerialization Mandate for Private Companies: Navigating Transparency & Challenges

[Bhabesh Satapathy and Harsh Mittal are third year B.B.A. LL.B. (Hons.) students at National Law University, Odisha] On October 27, 2023, the Ministry of Corporate Affairs (“MCA”) ushered in a significant change with the introduction of rule 9B through the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 (“PAS Rules”) The amendment is in harmony with the overarching...

The Enforceability of Investor Rights in Indian Private Equity

[Arjya B. Majumdar is an Associate Professor at Jindal Global Law School] Globally, private equity (PE) and venture capital funds are among the primary factors supporting entrepreneurship and furthering growth in companies. These investments are ordinarily made in exchange against some form of minority shareholding in the investee company, such as equity shares or convertible preference shares or...

Messer Holdings: Supreme Court Refuses to Decide on the Enforceability of Share Transfer Restrictions

As we have previously discussed on several occasions (here and here), the question of enforceability of share transfer restrictions in Indian companies has been a vexed one. Although the Bombay High Court has sought to bring about some resolution of the issues in its leading judgments of Messer Holdings v. Shyam Madanmohan Ruia and Bajaj Auto Ltd. v. Western Maharashtra Development Corporation...

Bombay High Court on Share Transfer Restrictions

The question of whether transfer restrictions imposed by agreement on shares of a listed company are enforceable has been a vexed one. Numerous decisions of the Supreme Court as well as High Courts had expressed somewhat different views on the nuances of the issue. However, some stability was brought about in 2010 by a decision of a division bench of the Bombay High Court in Messer Holdings v...

Public Company shares cannot be fettered at all, says Bombay HC

The Bombay High Court has ruled that any pre-emptive rights over shares in public limited companies are patently illegal in view of the principle of “free transferability” enshrined in Section 111A of the Companies Act, 1956 (“the Act”). This revives the debate on enforceability of shareholder agreements and joint venture agreements governing public limited companies. In the case of Western...

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