The Companies Act 2013 introduced the squeeze out provisions i.e. Squeeze out of Minority Shareholders.
In case the following persons become the holder of the 90% or more equity share capital of the company, then they shall notify the company of their intention to buy the remaining equity shares.
- an acquirer; or
- a person acting in concert with such acquirer; or
- any persons or group of persons.
- by an amalgamation; or
- by share exchange; or
- by conversion of securities; or
- for any other reason.
The minority shareholders shall be made an offer for buying the equity shares from them, at a price determined on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed.
Without prejudice to the above provisions, the minority shareholders of the company may offer to the majority shareholders to purchase the minority equity shareholding of the company at the price determined in accordance with such rules as may be prescribed.
The majority shareholders shall deposit an amount equal to the value of shares to be acquired by them, in a separate bank account to be operated by the transferor company for at least 1 year for payment to the minority shareholders and such amount shall be disbursed to the entitled shareholders within 60 days:
In the event of a purchase under this section, the transferor company shall act as a transfer agent for receiving and paying the price to the minority shareholders and for taking delivery of the shares and delivering such shares to the majority, as the case may be.
In the absence of a physical delivery of shares by the shareholders within the time specified by the company, the share certificates shall be deemed to be cancelled, and the transferor company shall be authorised to issue shares in lieu of the cancelled shares and complete the transfer in accordance with law and make payment of the price out of deposit made by the majority in advance to the minority by despatch of such payment.
When a shareholder or the majority equity shareholder fails to acquire full purchase of the shares of the minority equity shareholders, then, the provisions of this section shall continue to apply to the residual minority equity shareholders, even though,—
Meaning acquirer” and “person acting in concert”