Section 712 CAMA 2020

Section 712 Companies and Allied Matters Act is about Provisions applicable to schemes or contract involving transfer of shares in a company. It is under Chapter 27 (Arrangements and compromise) of the Act.

(1) Where a scheme or contract, not being a take-over bid under the Investment and Securities Act involving the transfer of shares or any class of shares in a company (in this section referred to as “the transfer of company”) to another company, whether a company within the meaning of this Act or not (in this section referred to as ‘the transferee company’) has,within four months after the making of the offer in that behalf by the transferee company been approved by the holders of at least nine-tenth in value of the shares of the company (other than shares already held at the date of the offer by a nominee for the transferee company, or its subsidiary), the transferee company may at any time within two months after the expiration of the said four months give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares.

(2) When a notice under subsection (1) is given, the transferee company is, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given, unless the Court deems fit to order otherwise, entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company.

(3) Where shares in the transferor company of the said class or classes as the shares whose transfer is involved are already held as specified in subsection (1) to a value greater than one-tenth of the aggregate of their value and that of the share (other than those already held as specified in that subsection) whose transfer is involved, the provisions of this section do notapply unless—

(a) the transferee company offers the same terms to all holders of the shares (other than those already held) whose transfer is involved, or where those shares include shares of different classes, of each class of them ; and

(b) the holders who approve the scheme or contracts besides holding atleast nine-tenth in value of the shares (other than those already held as aforesaid) whose transfer is involved, shall be at least three- quarters in number of the holders of those shares.

(4) Where a notice has been given by the transferee company under subsection (1) and the Court has not, on an application made by the dissenting shareholder, ordered to the contrary, the transferee company shall—

(a) on the expiration of one month from the date on which the notice has been given or if an application to the Court by the dissenting shareholder is then pending after that application has been disposed of, transmit a copy of the notice to the transferor company together with an instrument of transfer executed on behalf of the shareholder by any person appointed by the transferee company and on its behalf by the transferee company; and

(b) pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which by virtue of this section that company is entitled to acquire, and the transferor company shall thereupon register the transferee company as the holder of those shares.

(5) Any sum received by the transferor company under this section shall be paid into a separate bank account, and such sums and any other consideration so received shall be held by that company on trust for the several persons entitled to the shares in respect of which the said sums or other consideration, were respectively received.

(6) In this section, “dissenting shareholder” includes a shareholder who has not assented to the scheme or contract and any shareholder who has failed or refused to transfer to the transferee company in accordance with the scheme or contract.