XYZ Ltd. made a public issue of equity shares in September, 2014 and sought listing of BSE and NSE. Soon, thereafter, the promoters of the company started contemplating a change in the objects clause mentioned in the pro

CS Executive · Capital Markets & Securities Laws · PYQS · December 2017
XYZ Ltd. made a public issue of equity shares in September, 2014 and sought listing of BSE and NSE. Soon, thereafter, the promoters of the company started contemplating a change in the objects clause mentioned in the prospectus. To give effect to the same the company convened an extra-ordinary general meeting of shareholders in November 2015. Though the resolution was passed by the company there were nevertheless, the dissenting shareholders too. The promoters decide to provide an exit opportunity to the dissenting shareholders. In the light of the above, answer the following questions : Is this act of the promoters justified? Highlight the relevant regulatory legal framework for the same ?

Answer & Explanation:

Answer 5(b) Yes, the promoters Act is justified in accordance with Chapter VI-A namely 'Conditions and Manner of Providing Exit Opportunity to Dissenting Shareholders' of SEBI (Issue of Capital and disclosure Requirements) Regulations, 2009. The provisions of this Chapter shall apply to an exit offer made by the promoters or shareholders in control of an issuer to the dissenting shareholders in terms of section 13(8) and section 27(2) of the Companies Act, 2013, in case of change in objects or variation in the terms of contract referred to in the prospectus.

Topics: SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009

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