X Ltd. is a listed company and holds 100% equity of Y Ltd. Y Ltd. holds 15% equity in Z Inc., USA as on 31 st March, 2014. Due to the poor performance of Z Inc., USA, Boards of directors of X Ltd. and Z Inc., USA in thei
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2014
X Ltd. is a listed company and holds 100% equity of Y Ltd. Y Ltd. holds 15% equity in Z Inc., USA as on 31 st March, 2014. Due to the poor performance of Z Inc., USA, Boards of directors of X Ltd. and Z Inc., USA in their meeting held on 20 th May, 2014 approved merger of Z Inc., USA with X Ltd. with effect from 1 st April, 2014. The scheme of merger was filed with the Hon'ble High Court of Delhi pursuant to sections 391-394. The Registrar of Companies (ROC) has raised objections that sanction of the scheme of merger would result in the buying back by the X Ltd. of shares of its subsidiary Z Inc., USA and would thereby violate the provisions of section 42 and section 77. Comment whether the objection raised by the ROC is sustainable in the court of law.
Topics: Corporate Restructuring
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