Shareholders Agreement Companies Act 2013 India

As far as private companies are concerned, the clauses relating to the shareholders` pact are to be mentioned in the statutes. This condition is particularly important in cases related to restrictions on the portability of the shares of members of society. An important development under the 2013 Act is the restriction that a company has introduced to invest at more than two levels of investment companies (i.e. companies whose main activity is the acquisition of shares, bonds and other securities). [10] There are no guidelines in the 2013 Law on determining a company`s core business. This phrase has also been debated in the legal order of non-bank financial companies, governed by the Reserve Bank of India. In the absence of legal clarity in this regard, deal structures should be carefully considered to ensure compliance with this restriction. “The shareholders have agreed to manage the joint management of the company in accordance with the Companies Act 2013 (`company`). The classic example of this is in the case of a proposal to sell the business to a third party as a current company and the intended buyer wants total control of 100% over the company, but minority shareholders do not vote in favour of this transaction.

Here, the entire transaction cannot be executed at all due to disagreements between minority shareholders. There is no specific legal act governing the shareholder contract and, furthermore, there is no uniform case law to govern the agreement. There is no mandatory legal formality for its creation. However, it is based in part on the Contract Act and other legal principles. Section 2 (68), read by paragraphs 44 and 56 of the Corporations Act, 2013 requires that any limitation of the transfer of shares in a private company be fixed in the articles, and any violation by the company and company officials when registering a share transfer to Section 56 follows with a penalty of no less than twenty-five thousand rupees that can extend up to five lakh rupees and no less than ten thousand rupees up to a lakh rupee. Therefore, it should be noted that any restriction on the transfer of shares, as stipulated in the shareholder contract but contrary to the articles, may make the company liable for a late payment when registering the shares, on the grounds that this is not in accordance with the shareholder contract.