In one of our previous articles, we had covered the provisions in the Companies Act which provide mandatory and voluntary ways exit can be given to minority shareholders of unlisted and listed companies. In this, we revisit applicable sections which are updated recently.

As on date, it was difficult for majority shareholders to acquire all or some of the minority shareholders, as relevant sub-sections (11) and (12) of section 230 of the Companies Act 2013 were not notified till recently on  February 3, 2020. Along with the notification, following rules were also amended to effectively facilitate and execute takeover offer.

  1. The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016(“Rules”)in order to implement the enforcement of Section 230 (11) of the Act;
  2. The National Company Law Tribunal Rules, 2016 (“NCLT Rules”) in order to implement the enforcement of Section 230 (12) of the Act.

The notification contains framework facilitating members of Unlisted Companies to make offer for takeover by making an Application to National Company Law Tribunal (“NCLT”).


The Section 230 (11) of the Act provides that in case of unlisted companies, any compromise or arrangement may include takeover offer in compliance of the prescribed Rules. As we know in case of listed companies, takeover offers shall be as per the SEBI Takeover regulations.

As per the rule 3(5), any shareholder along with other shareholders holding together at least 75% of the shares (“The Applicant”) in the company can initiate an arrangement for acquiring the shares of the remaining shareholders of the company as part of the scheme u/s 230 of the Act. Here, shares mean the equity shares of the company carrying voting rights and includes any securities which entitles the holder to exercise voting rights. This is obvious as there are separate provisions under the Act for redemption of preferences hares

While making an application for arrangement for the purpose of takeover offer to the NCLT u/s 230 (11) of the Act, the Applicant must comply with compliances as mentioned in Section 230 and in other sub clauses of Rule 3 of the Rules and in addition as per the new sub-rule (5) inserted in Rule 3, the application must contain:

  1. Report of the registered valuer disclosing the details of the valuation of the shares proposed to be acquired by the member;
  2. Details of the bank account opened separately by the member where not less than one-half of total consideration of the takeover offer is deposited.

The registered valuer must consider the following factors while issuing report:

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