company law i final project
TRANSCRIPT
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RIGHTOFFIRSTREFUSAL: A CONTRACTUALRESTRICTIONON
TRANSFEROFSHARES
PPROJECTROJECT
(Towards partial fulfilment of mid-term examination in the subject of Company Law- I)
SUBMITTEDBY: SUBMITTED
TO:
Krati Chouhan (1061) Mr. Anindhya Tiwari
Semester V Faculty o !aw
NATIONALLAWUNIVERSITY, JODHPUR
SUMMERSESSION
(JULY-NOVEMBER2015)
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TABLEOFCONTENTS
1. Ta"le o Contents...........................................................................................................#
2. Ac$nowled%ement..........................................................................................................&
3. A"stract..........................................................................................................................'
4. ntroduction....................................................................................................................
5. *re+,m-tie /i%ht..........................................................................................................6
6. ac$%round....................................................................................................................
7. 2udicial *recedents.........................................................................................................3
+ 4i%h Courts iew...............................................................................................3
+ Su-reme Courts iew.......................................................................................10
8. Current *osition in ndia..............................................................................................1#
9. *roision under the Com-anies Act5 136...................................................................1'
10.Messer 4oldin%s !imited v.Shyam Madanmohan /uia and rs................................16
+ Analysis............................................................................................................13
11.*roision under The Com-anies Act5 #01&..................................................................13
12./estrictions on the transera"ility o shares in *u"lic and *riate Com-anies............#1
13.The /i%ht o First /eusal still remains a si%niicant unresoled controersy in ndian
Cor-orate !aw..............................................................................................................##
14.Conclusion....................................................................................................................#'
15.i"lio%ra-hy.................................................................................................................#6
+ Articles.............................................................................................................#6
+ oo$s................................................................................................................#
+ Cases................................................................................................................#+ /e-orts 7 8otiications...................................................................................#
+ Statutes.............................................................................................................#9
+ :e"sites...........................................................................................................#9
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ACKNOWLEDGEMENT
This -ro;ect is a ma;or milestone in our ;ourney o learnin% in the su";ect o Com-any !aw.
would li$e to "e%in "y than$in%
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ABSTRACT
The aim of this project is to analyse the current position of the clause i!ht of "irst efusal
(#$"%) which is one &ey term in commercial contracts involvin! shareholders of
corporate entities. $" is a pre-emptive option of a non-sellin! shareholder to purchase
shares of a company that a sellin! shareholder proposes to li'uidate. If the non-sellin!
shareholder refuses to purchase such shares the sellin! shareholder can sell the shares to a
third party usually with a stipulation that the terms of such sale and more importantly the
sale price should not be more favourable than those offered to the non-sellin! shareholder. In
a nutshell $" forms an inte!ral part to investors protection in a shareholders a!reement
(#*+,%). $" (amon! other shareholders ri!hts such as ri!ht to first offer ta! alon!
dra! alon!) has however been viewed as a hindrance to the principle of free transferability
of shares of a public limited company laid down in *ection -, of the Companies ,ct
/01.
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INTRODUCTION
Amon% arious -roisions o incor-oratin% documents such as shareholder?s a%reement in a
cor-oration5 an item will oten a--ear la"elled @/F/ B @/i%ht o First /eusal. /F/ is a
contractual ri%ht that o"li%es the sellin% shareholder not to sell its shares in the com-any to a
third -arty without oerin% his shares to another -arty (usually the other e>istin%
shareholders). the e>istin% shareholder(s) does not acce-t the oer5 the sellin% shareholder
is ree to sell his sta$e to a third -arty5 prov!"! #$" %&'" % (o# o( )or" *&vo+r&,'" #"r)%
#$&( #$o%" o**"r"! #o #$" "-%#(. %$&r"$o'!"r%. Meanin% there"y5 the /F/ re=uires the
owner o a -ro-erty to oer the same to the ri%ht holder5 on the same terms as those oered
"y the third -arty5 "eore the owner can sell the -ro-erty to that third -arty. y ado-tin% this
-roision5 the shareholders o the cor-oration -romise that they only will sell their shares
ater ne%otiatin% a -rice with a third -arty and oerin% the shares at that -rice to their ellow
shareholders.
/i%ht o First /eusal in a shareholder?s a%reement -roides the %rantee with a contin%ent
o-tion to -urchase an asset i the %rantor elects to sell the shares1. eore ta$in% into account
the le%al -osition with re%ard to the aoresaid issue5 it would "e worthwhile to hae a "rieinsi%ht into some o the ocal conce-ts -ertainin% to the -roisions incor-orated in
a%reements such as 2oint Venture A%reements? or Shareholders A%reement?.
These a%reements si%ned amon%st the shareholders may include some -roisions5 which
"roadly include the ollowin%D
i. The /i%ht o irst reusalE
ii. ra%+Alon% /i%htE and A ri%ht that ena"les ama;ority shareholderto orce a minority
shareholderto ;oin in the sale o a com-any. The ma;ority owner doin% the dra%%in%
must %ie the minority shareholder the same -rice5 terms5 and conditions as any other
seller.
iii. Ta%+Alon% /i%ht. a ma;ority shareholder sells his or her sta$e5 then the minority
shareholder has the ri%ht to ;oin the transaction and sell his or her minority sta$e in
the com-any.
1 aid . :al$er5ethin&in! the i!ht of "irst efusal5
th
Stanord 2ournal o !aw5 13335iscussion *a-er 8o. #615 The 4arard !aw School.
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http://www.investopedia.com/terms/m/majorityshareholder.asphttp://www.investopedia.com/terms/m/majorityshareholder.asphttp://www.investopedia.com/terms/m/majorityshareholder.asphttp://www.investopedia.com/terms/s/shareholder.asphttp://www.investopedia.com/terms/m/majorityshareholder.asphttp://www.investopedia.com/terms/s/shareholder.asp -
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A /oo essentially means that i a shareholder entity decides to sell its share in the com-any5
the sellin% shareholder must irst oer its shares to the other shareholder (to whom a /oo is
%ranted)5 who in turn may oer a -rice or the shares to the sellin% shareholder. satisied "y
the -rice oered "y the other shareholder or i the sellin% shareholder is una"le to o"tain a
hi%her -rice rom a third -arty5 then the sellin% shareholder entity only has the o-tion to sell
its shares to the shareholder who has the /oo ri%ht. 4oweer5 i the sellin% shareholder
receies a -rice hi%her than that oered "y the other shareholder rom a third -arty5 the
sellin% shareholder is ree to sell shares to the third -arty at the hi%her -rice.
For instance5 i there are two shareholders in a -riate com-any5 say5 A and 5 with a /oo in
aour o %ranted "y A5 and A decides to sell his shares5 then A must irst oer his shares to
. nly i reuses to -urchase A?s shares5 or i A can o"tain a hi%her -rice or his shares
rom a third -arty than that oered "y 5 can A sell his share to a third -arty. n the other
hand5 i there is a /or in aour o 5 then A is irst re=uired to oer his share to third -arties
and o"tain a -rice rom them or this. A is then re=uired to a--roach with the -rice oered
"y third -arties. can match or "etter the -rice oered "y third -arties5 A must sell his
share to .
Contractual ri%ht under which a -arty has the irst o--ortunity to "uy an asset "eore it is
oered to a third -arty. Com-are with ri%ht o irst reusal. Also called -reem-tie ri%ht or
ri%ht o -reem-tion.
Ty-ically in the /i%ht o irst reusal (/F/)5 at least three -arties are im-licated G the owner
and ri%ht holder who hae contracted or the %rant o the ri%ht and one or more -otential
third+-arty "uyers5 should "e to whom the com-any wishes to oer B sell the shares.#n "rie5
the ri%ht o irst reusal is a$in in conce-t to a call o-tion. The /F/ can coer almost any
sort o assets and is commonly em-loyed in a ariety o contractual settin%s. t is ound5
amon% others5 in real estate sale5 lease contracts5 -ersonal -ro-erty5 a -atient license5 a
screen-lay5 in a%reements amon% shareholders o a closely held com-any or in an interest in a
"usiness. t mi%ht also coer "usiness transactions that are not strictly assets5 such as the ri%ht
to enter into a ;oin enture5 a distri"ution a%reement or mana%ement a%reement. For instance5
in the entertainment industry5 a ri%ht o irst reusal on a conce-t or a screen-lay would %ie
#2nforceability of provisions not formin! part of the company documents3 ,n analysis in thelaw5 S, 7 Cor-orate !aw :ee$ly ssue5 Se-tem"er ##5 #009
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the holder the ri%ht5 assumin%ly5 to ma$e that moie irst. nly i the holder turns it down
may the owner then sho- it around to other -arties.
Ta$in% the a"oe into consideration5 it may "e noted that the aorementioned ri%ht is ramed
so as to enorce the interests o the inestors and the -romotersB current shareholders in a
-articular enture. Considerin% the same5 it would "e a utile e>ercise i the enorcea"ility o
the said ri%ht is not $nown to the -arties to such a%reements.
PRE1EMPTIERIGHT
As com-ared to /F/5 there is an almost similar ri%ht which is $nown as a -re+em-tie
ri%ht. t may not "e easy -ro-osition to dierentiate "etween the /F/ and the -re+em-tie
ri%hts5 as the two seem to "e similar5 i not identical. Contrary to a ri%ht o irst reusal5 a -re+
em-tie ri%ht a--ears to "e similar to & r.$# o* *r%# o**"r. A /i%ht o irst oer is a close
cousin to the ri%ht o the irst reusal. U(!"r #$" r.$# o* *r%# o**"r ,"*or" &( o("r 5&(
%"'' prop"r#6 %+,7"5# #o & r.$# o* *r%# o**"r #$" r.$# $o'!"r )+%# ," .v"( #$" 5$&(5" #o
)&8" &( o**"r *or #$" prop"r#69 T$" o("r 5&( #$"( "#$"r &55"p# #$" o**"r or #$" o("r
5&( %"'' #$" prop"r#6 #o & #$r! p&r#6 ,+# o('6 & pr5" &,ov" #$" o(" o**"r"! ,6 #$"
r.$# $o'!"r9For this ri%ht to "e eectie and enorcea"le5 in the case o -riate com-any5
the same may "e inserted in the Articles o Association o the Com-any. As -er the said ri%ht5
the ri%ht to transer shares to non+mem"ers is restricted. Further5 it is worthwhile to note that
a -riate a%reement "etween two or more shareholders in which they im-ose restrictions
u-on each other as to their ri%ht o transer does not "ind the com-any and5 conse=uently5 the
same is li$ely to "e a su";ect matter o a ciil suit "etween the -arties to the a%reement and
the -arty committin% "reach may hae to answer in terms o dama%es to the other. To "ind
the com-any5 the a%reement has to include the com-any as one o the -arties5 and it has to "e
a su";ect matter in the Articles o Association.&
& *upranote 1
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BACKGROUND
The discussion on this su";ect "e%an in the year 133# when the Su-reme Court in the case oV.B.Rangaraj v. V.B.Gopalakrishnan4held that in case o a -riate limited com-any transer
restrictions5 i any5 a%reed "y the shareholders unless em"odied into the articles o association
would not "e alid and "indin%. n the other hand5 the elhi 4i%h Court and the Com-any
!aw oard held that in case o listed shares there cannot "e any restrictions namely ri%hts o
irst reusal or any such ri%hts. This was "ecause Section 111A (#)o the Com-anies Act
1365 -roides that the shares and de"entures and any interest therein o a com-any shall "e
reely transera"le. 2ustice Chandrachud o the om"ay 4i%h Court also too$ the same iew
in #010 in the case o Western Maharashtra Development Corporation v. Bajaj Auto Ltd
and o"sered that @the -rinci-le o ree transera"ility must "e %ien a "road dimension in
order to ulil the o";ect o the law. m-osin% restrictions on the -rinci-le o ree
transera"ility is a le%islatie unction5 sim-ly "ecause the -ostulate o ree transera"ility
was enunciated as a matter o le%islatie -olicy when *arliament introduced Section 111A
into the Com-anies Act5 136. That is a "indin% -rece-t which %oerns the discourse on
transera"ility o shares. The word @transera"le is o the widest -ossi"le im-ort and
*arliament "y usin% the e>-ression @reely transera"le5 has reinorced the le%islatie intent
o allowin% transers o shares o -u"lic com-anies in a ree and eicient domain. The eect
o a clause o -re+em-tion is to im-ose a restriction on the ree transera"ility o the shares "y
su";ectin% the norms o transera"ility laid down in Section 111A to a -re+em-tie ri%ht
created "y the a%reement "etween the -arties. This is im-ermissi"le.
This inter-retation was causin% lot o hardshi- on the *, inestors B Strate%ic *artners in
ne%otiatin% the ri%ht o irst reusal or ta% B dra% ri%hts with the *romoters5 which arety-ically e>it o-tions ne%otiated to -rotect their commercial interest. Huestion thereore was
' 4 5 an!araj v. 4 5 6opala&rishnan5 I1331J 6 C!A #11
Section 111A (#) o Com-anies Act5 136D Su";ect to the -roisions o this section5 the
shares or de"entures and any interest therein o a com-any shall "e reely transera"le.
6 (#010) 1' Com-Cas 3& (om)
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whether in a listed com-any one can alidly oer ri%ht o irst reusal or ta%Bdra% alon% ri%hts
that would ultimately "e le%ally enorcea"le
The aoresaid decisions came u- or consideration "eore the iision "ench o the om"ay
4i%h Court in case oMesser !oldings Limited v. "h#am Madanmohan Ruia and $rs%. The
;ud%ment is interestin% as it comes in the wa$e o the om"ay 4i%h Court ;ud%ment in a;a;
Auto case9Eit chan%ed the way to ne%otiate restriction on transer o shares in a -u"lic
com-any. That ;ud%ment had ruled that any -re+em-tie ri%hts oer shares in -u"lic limited
com-anies were ille%al in iew o the -rinci-le o @ree transera"ility enshrined in Section
111A o the Com-anies Act5 136. The de"ate on enorcea"ility o terms o shareholder
a%reements %oernin% -u"lic limited com-anies is deinitely not oer yet.
The Court with res-ect re;ected the earlier inter-retation %ien to the words @ree
transera"le used in section 111A "y the sin%le 2ud%e in the a;a; Auto case3. The iision
"ench or the irst time e>amined the true intent o section 111A5 the reason or its insertion
in the Com-anies Act5 136 and o"sered that earlier when the shares were in -hysical orm5
"oard o directors used ar"itrary -owers to re;ect transer o shares leadin% to lot o
com-laints "y the transerees. That situation was -artially remedied "y insertion o section
##A o the Securities Contract /e%ulation Act5 which laid down only our %rounds on which
any "oard could re;ect transers. :ith the introduction o the conce-t o dematerialiLed shares
throu%h the e-ositories Act5 13365 section ##A %ot deleted and section 111A was introduced
in the Com-anies Act to deal with rectiication o re%ister. T$" Co+r# o,%"rv"! #$ #$"
$o'" p+rpo%" o* %"5#o( ===A % #o r".+'" #$" r.$# o* #$" ,o&r! o* !r"5#or% #o r"*+%"
#r&(%*"r o* %$&r"%9nder Section 111+A5 the Com-any !aw oard has "een em-owered to
direct any de-ository or com-any to rectiy its re%ister or records on an a--lication made to it
"y a de-ository5 com-any5 -artici-ant or inestor or S,.10
7esser +oldin!s Ltd. v. *hyam 7adanmohan uia I#010J 39 C!A
9 8estern 7aharashtra 9evelopment Corporation v. 5ajaj ,uto Ltd.5 (#010) 1' Com-Cas
3& (om)
3Ibid.
10 A /amaiya5 6uide to the Companies ,ct5 1
th
edn.5 #0105 *art 15 !e>is 8e>isutterworths5 :adhwa5 8a%-ur
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JUDICIALPRECEDENTS
HIGHCOURTSVIEW
&9 J+!.)"(#% ( *&vo+r o* ROFR%
i. Ma&atlal 'ndustries Ltd. v. Gujarat Gas Co. Ltd9
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4on?"le Court that -re+em-tie ri%hts arise out o a -riate contract "etween shareholders
with a third -arty and these need not "e em"odied in the articles o association o the
com-any since the com-any is not a -arty to such arran%ements.1#
,9 J+!.)"(#% (o# ( *&vo+r o* ROFR%
9 (ushpa )ato*h v. Manu Maharani !otels Limited
elhi 4i%h Court has held that there could not "e any etters on the ri%ht o a shareholder to
transer hisBher shares in a -u"lic com-any. t was s-eciically held that -re+em-tie ri%hts
are unenorcea"le een i incor-orated in the articles o association5 since such ri%hts would
"e ultra ires to Section 111+A.1&
9 Western Maharashtra Development Corporation Ltd. v. Bajaj Auto Ltd
om"ay 4i%h Court relied on *ush-a Katoch and held /F/s to "e -atently ille%al. t held
that -re+em-tie ri%hts %o a%ainst the s-irit o Section 111+A5 and thereore are not le%ally
tena"le. Sin%le 2ud%e o the om"ay 4i%h Court held that the -rinci-le o ree transera"ility
must "e %ien a "road dimension in order to ulil the o";ect o the law. The word
@transera"le is o the widest -ossi"le im-ort and *arliament "y usin% the e>-ression @reely
transera"le5 has reinorced the le%islatie intent o allowin% transers o shares o -u"liccom-anies in a ree and eicient domain. The Court urther held that the A%reement and
-roision in Articles o Association restrictin% the transer shares is iolatie o section 111A
read with section 3 o the Com-anies Act and thereore it is oid and accordin%ly the award is
contrary to su"stantie -roisions o law and is -atently ille%al.1'
SUPREMECOURTSVIEW
a) 9B9 R&(.&r&7 v9 9B9 Gop&'&8r%$(&(=/
1# *upra note
1&:ushpa ;atoch v. 7anu 7aharani +otels Limited5 #006 (1&1) Com-Cas '# el
1' 8estern 7aharashtra 9evelopment Corporation Ltd. v. 5ajaj ,uto Ltd5 (#010) 1' Com-
Cas 3& (om)
1 A/ 133# SC '&
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n this Case shareholders o a -riate limited com-any were two "ranch o amily and it was
a%reed orally in 1315 it means in "ac$dro- o nde-endence and -artition5 that the -ro-ortion
o the shareholdin% o res-ectie "ranches would not chan%e5 and urther a%reed that or this
-ur-ose5 any mem"er o a "ranch want to sell his shares must irst oer the share to his own
"ranch. The cru> in this case is the oral a%reement a"out restriction was not incor-orate in
Articles. /eerrin% its own earlier releant decision in Kalin%a Tu"es5 the Su-reme Court
held that the shares are @reely transera"le and that a -riate a%reement im-osin%
restriction on transer o shares which is not sti-ulated in Articles o association is neither
"indin% to the Com-any nor to shareholders. t means such $ind o a%reement is oid in toto.
ne thin% ery clearly esta"lished in this case is any restriction on share transer must "e
incor-orated in the Articles o the Com-any otherwise it will not hae any eect and
a%%rieed shareholder can not hae any le%al remedy a%ainst iolation o such restrictie
-roisions o a%reement or understandin%.
The Su-reme Court held that a restriction on the transer o shares contrary to the articles o
association o a -riate com-any was not "indin% on the -riate com-any or its shareholders.
Althou%h this ;ud%ment was in relation to a -riate com-any5 its reasonin% has also "een
a--lied to -u"lic com-anies. Thereore5 i restrictions on transer o shares are to "e
enorcea"le5 -roisions in the articles o association o a com-any are needed. The Court hadta$en the iew that -roisions o the S4A im-osin% restrictions een when consistent with
com-any law are to "e authoriLed only when they are incor-orated in the articles o
association.
") o!&*o(" I(#"r(o(&' Ho'!(.% B99 v9 U(o( O* I(!& &(! &(o#$"r=
The Court has ta$en a iew that reedom o contract can "e restricted "y law only in cases
where it is or some %ood o the community. The Com-anies Act5 1365 or the other
le%islations do not e>-licitly or im-liedly or"id shareholders o a com-any to enter into
a%reements as to how they should e>ercise otin% ri%hts attached to their shares.
n this case the Su-reme Court did not su"scri"e with the iew ta$en in the /an%ara; case (as
stated a"oe) and stated that S4A is a -riate contract "etween the shareholders com-ared to
the articles o association o the com-any5 which is a -u"lic document. S4A is essentially a
16 #01# (1) 2 &&'
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contract "etween some or all other shareholders in a com-any5 the -ur-ose o which is to
coner ri%hts and im-ose o"li%ations oer and a"oe those -roided "y the com-any law.
Further5 the Court stated that the -roisions o the S4A incor-oratin% /F/s need not
necessarily "e authoriLed "y the articles o association o the concerned com-any.
Accordin%ly5 the Court has im-lied that in the eent the articles o association o a com-any
are silent with re%ards the -roision o /F/?s5 they can "e le%ally enorcea"le5 su";ect to
the same "ein% incor-orated in the S4A.
CURRENTPOSITIONININDIA
/ecently on the cto"er &5 #01& a 8otiication1was issued "y S, (Securities ,>chan%e
oard o ndia)5 which said that /i%ht o First /eusal was le%ally allowed and alid in the
Shareholders A%reement. t also allowed ta% alon% and dra% alon% ri%hts. Throu%h this5 S,
has rescinded its -reious notiication o March 15 #000 that -rohi"ited contracts other than
s-ot deliery contracts or those entered into throu%h the stoc$ e>chan%e mechanism.
Accordin%ly5 S, now -ermits arious ty-es o -re+em-tion ri%hts and -ut and call o-tions5
"ut su";ect to certain conditions. The new -osition is as ollowsD
1. S-ot deliery contracts are -ermitted5 consistent with the -reious -ositionE
#. Sale and -urchase contracts on securities are -ermitted so lon% as they are in accordance
with securities re%ulations and stoc$ e>chan%e re%ulations and "y+laws. These would include
transactions5 includin% in deriaties5 which are carried out throu%h the stoc$ e>chan%e.
&. Contracts or -re+em-tion includin% ri%ht o irst reusal (/F/) or ta%+alon% or dra%+
alon% ri%hts contained in shareholders a%reements or articles o association are allowed. 8ote
that this is only an inclusie -roision and is not e>haustie o all the ty-es o -roisions in
the a%reements or articles that can "e enorced. This ena"les inestors to e>ercise their e>it
ri%hts in com-anies throu%h the a"oe mechanisms that are %enerally reco%niLed. 8o
conditions are attached or the e>ercise o these ri%hts.
1 The traordinary5 *art 5 S, 8otiication (Mum"ai)5 &
rd
cto"er5#01&
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'. *ut and call o-tions contained in shareholders a%reements or articles o association are
treated somewhat dierently rom -re+em-tion ri%hts discussed in item & a"oe. The reason
is that the e>ercise o o-tions is su";ect to certain conditionsD
a) The underlyin% securities that are the su";ect matter o the o-tions must hae "een
held "y the releant -arty or a minimum -eriod o 1 year rom the date o enterin%
into the o-tion contract. This seems to "e to ensure that o-tions are not short+term in
nature and are -ermitted only when the holdin% o the securities is or a considera"le
-eriod o time. The %enesis or the erstwhile -rohi"ition on o-tions was to -reent
s-eculation in securities5 and this a--roach is im-osin% a minimum 1+year term on the
o-tions is consistent with that -hiloso-hy.
") The -ricin% o the o-tions and the e>ercise is to com-ly with a--lica"le laws. More
s-eciically5 the notiication states that all contracts -ermitted throu%h it must com-ly
with the -roisions o the Forei%n ,>chan%e Mana%ement Act5 1333. This a--lies
when o-tions and -re+em-tion ri%hts are %ranted "y or in aour o a non+resident
inestor. :here the e>ercise o the o-tion or -re+em-tion results in a transer o
securities "etween a resident and a non+resident inestor5 then the idea is that the
releant -ricin% norms im-osed "y the /esere an$ o ndia (/) must "e com-lied
with. This is si%niicant or orei%n inestors to ta$e into account. Merely "ecause
S, has now conditionally -ermitted o-tions5 it does not mean that -arties hae
com-lete reedom in e>ercisin% the o-tions. The -ricin% is still re%ulated "y the
releant / norms5 and hence the commercial understandin% "etween the -arties
re%ardin% the e>ercise -rice will "e su";ect to these re%ulatory constraints.
c) The new -ermissi"le re%ime a--lies only to -hysically+settled o-tions where there is
an actual deliery o the underlyin% securities. t does not coer cash+settled o-tions5
which are essentially contracts or dierences. This is understanda"le %ien the
-hiloso-hy o the le%al re%ime to cur" s-eculation. Moreoer5 inestment a%reements
(where inestors see$ e>it ri%hts) usually relate to an actual sale or -urchase o
securities rather than a contract or dierences5 and hence this should not -ose
diiculties or customary inestment transactions.
. This new -ermissi"le le%al re%ime a--lies only -ros-ectiely5 and does not @aect or
alidate any contract which has "een entered into -rior to the date o the notiication.
4ence5 -ast contracts with -re+em-tion ri%hts or -ut and call o-tions will not "e
@%randathered. ne -ossi"ility to oercome this restriction would "e or -arties to
e>istin% contracts to re+e>ecute them as o a uture date.
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6. Finally5 an e>-lanation to the notiication states that the contracts s-eciied in the
notiication would "e alid without re%ard to anythin% contained in section 19A19o the
Securities Contracts (/e%ulation) Act5 1365 which reers to e>chan%e traded contracts.
n other words5 such -re+em-tion ri%hts and o-tion contracts would "e -ermissi"le een
thou%h they are entered into on an oer+the+counter (TC) "asis and not traded on the
stoc$ e>chan%e.
erall5 S,?s notiication re-resents a momentous re%ulatory chan%e. Com-anies5
inestors and their adisors hae "een %ra--lin% with concerns re%ardin% the enorcea"ility o
-re+em-tion ri%hts and o-tions or nearly two decades now. The oddity o the situation was
the e>-ansie a--lication o S,?s -reious re%ime that a--lied not only to listed com-anies
"ut also to unlisted -u"lic com-anies. Moreoer5 while s-eculation was the concern5 it
seemed to encom-ass %enuine transactions as well5 ma$in% customary inestment
transactions ineicient in terms o structurin% (-articularly o e>it o-tions).
The current moe is welcome as it rectiies a -reiously am"ialent and restrictie le%al
re%ime. This will au%ur well to inestors as well as com-anies re=uirin% ca-ital. There may
ery well "e issues re%ardin% the s-eciics o the recent notiication and the conditions
im-osed therein5 "ut the oerall deelo-ment is -ositie in nature.13
PROISIONUNDERTHECOMPANIESACT =>/
ne o the most controersial =uestions raised and still "ein% am"ialent isD
Whether R$+R agreements, -ag along and Drag along rights are en&or*eale under la/
and in *omplian*e /ith se*tion 000A o& the Companies A*t, 0123
t is -ertinent to hi%hli%ht that this -oint is no lon%er /es nte%ra (untouched)5 "ut is coered
"y the decision o the Su-reme Court in the cele"rated case o V.B.Rangaraj v.
19 Section 19AD 8otwithstandin% anythin% contained in any other law or the time "ein% in
orce5 contracts in deriatie shall "e le%al and alid i such contracts are+ (a) traded on a
reco%nised stoc$ e>chan%eE (") settled on the clearin% house o the reco%nised stoc$
e>chan%e5 in accordance with the rules and "ye+laws o such stoc$ e>chan%e.
13 *upranote 1
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V.B.Gopalakrishnan5. n the said case5 the A-e> Court has held that a restriction which is
not s-eciied in the Articles o Association is not "indin% either on the Com-any or on the
shareholders. The court urther held that the arran%ement (as in the said case) im-osed
additional restrictions on the mem"er?s ri%ht o transer o his shares which were not
sti-ulated in the articles and5 thereore5 were not "indin% either on the shareholders or on the
com-any. t was also held that the shares are moa"le -ro-erty and transer thereo is
re%ulated "y the articles o association o the Com-any. The Court held that een i the
Articles o Association -roide or a /F/5 i the ri%ht is a restriction on the ree
transera"ility o shares and not a mere -rocess5 then it is not li$ely to "e enorcea"le.
!ater the 2udicial iew -oint decided in #010 in the case oMesser !oldings Limited v.
"h#am Madanmohan Ruia and $rs.0
5 A iision ench o the om"ay 4i%h Court had
ruled in this case that a -riate arran%ement "etween shareholders o a -u"lic limited
com-any on a oluntary "asis relatin% to share transer restrictions (ri%ht o irst reusal) is
not iolatie o Section 111A o the Com-anies Act5 136. The ;ud%ment also %oes on to
su%%est that it is not mandatory or the Com-any to "e a -arty to such an a%reement relatin%
to share transer restrictions and it is not necessary to incor-orate share transer restrictions in
the articles o association o the Com-any.
Shareholders can enter into a consensual a%reement in case o shares o -u"lic com-anies5
can also reely ne%otiate and enter into a%reement containin% the /F/ or what is commonly
$nown as *re+em-tionB Ta% Alon%B ra% Alon% ri%hts een in the case o listed shares5 which
was recently conirmed "y the iision "ench o A.M. Khanwil$ar and A.A. Sayed5 22. o the
om"ay 4i%h Courts. These Share *urchase A%reement (S*A) are usually assent "etween the
*romoters5 *, nestors5 Technical or Financial Colla"orators.
The decision in the case o7esser +oldin!-roided some relie to shareholders o a -u"lic
com-any howeer not resoled issues and concerns o cor-orates and ;oint enture -arties.
ut some =uestions yet to ind their stands. :ithout a com-any "ein% a -arty to the
a%reement "etween the shareholders5 its terms cannot "e inserted in to Articles and een in
case it is incor-orated in the Articles5 the alidity o restriction on share transer in a -u"lic
com-any would not "e sustained and u-hold loo$in% the decisions deliered so ar. n such
#0 *upranote '
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circumstances5 since shareholders a%reement is not "idin% to a Com-any5 a shareholder
cannot restrict the com-any rom transerrin% shares which is in iolation o the a%reement.
nless and until the role o the com-any and such restrictions alidly ind the -lace in
Articles5 Com-any !aw oard would not hae ;urisdiction or ciil "reach. Thereore remedy
aaila"le or a%%rieed shareholder is to a--roach ciil court5 which is costly and len%thy and
many times -arties reluctant to -reer it in ;oint enture "usiness##.An in+de-th analysis o
the aorementioned case is re=uired as it is the most recent decision on the -oint in issue.
MESSERHOLDINGSLIMITEDV.SH?AMMADANMOHANRUIAANDORS9
The acts in "rie5 om"ay >y%en !td is deendant no. # com-any was listed on S,.
Messer holdin% was the ma;or shareholder o the Com-any. t entered into a%reement dated
2une #&5 133 where under the ce-t some situation as
-roided in the a%reement. n this case5 the ar%uments were (a) the a%reement was oid
"ecause o raud and misre-resentation (") the a%reement was oid "ecause it was in
iolation o S, rules and re%ulation and (c) the a%reement was oid as it restrict ree
transera"ility in term o section 111A o the Com-anies Act and recent decision o om"ay
4i%h Court in the case o a;a; Auto.
Clause 6.1 o the S*A dated 2une #&5 133 "etween the -arties conerred a ri%ht o irst
reusal on the /uias in res-ect o the shares o om"ay >y%en !td.5 unless the shares were
to "e sold to a mem"er o the 4oechst %rou- o com-anies.
The controllin% shareholders o om"ay >y%en !td5 a -u"lic listed com-any a%reed to
diest a ma;ority o their shareholdin% to Messer
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issues5 we analyLe the issue -ertainin% to the le%ality o Clause 6.1 o the S*A and whether
the same is iolatie o ree transera"ility o shares in a -u"lic com-any -roided "y Section
111 A o the Act. M-ression
reely transera"le in Section 111A o the Act does not mean that the shareholder cannot enter
into consensual arran%ementsBa%reement with the third -arty (-ro-osed transeree) in relation
to his s-eciic shares.
The conce-t o ree transera"ility o shares o a -u"lic com-any is not aected in any
manner i the shareholder e>-resses his willin%ness to sell the shares held "y him to another
-arty with ri%ht o irst -urchase (-re+ em-tion) at the -reailin% mar$et -rice at the releant
time. So lon% as the mem"er a%rees to -ay such -reailin% mar$et -rice and a"ides "y other
#& *upranote 9
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sti-ulations in the Act5 /ules and Articles o Association there can "e no iolation. For the
sa$e o ree transera"ility "oth the seller and -urchaser must a%ree to the terms o sale.
Freedom to -urchase cannot mean an o"li%ation on the shareholder to sell his shares.
/eliance was also -laced on Section 3 o the Com-anies Act5 136 which sti-ulates that
-roisions o the Act shall hae the eect notwithstandin% anythin% to the contrary contained
in the Memorandum or Articles o the Association.
The decision inM.".Madhusoodhanan v. )erela )amaudi (vt. Ltd.4% &( &+#$or#6 o( #$"
propo%#o( #$ 5o(%"(%+&' &.r"")"(#% ,"#""( p&r#5+'&r %$&r"$o'!"r% r"'(. #o
#$"r %p"5*5 %$&r"% !o (o# )po%" r"%#r5#o( o( #$" #r&(%*"r&,'#6 o* %$&r"%9Further5
such consensual a%reements "etween -articular shareholders relatin% to their shares can "e
enorced li$e any other a%reements. t was not re=uired to "e em"odied in the Articles o
Association. The iision ench also relied on the distinction drawn "y the Su-reme Court
in7adhusoodhanancase rom the -ro-osition laid down in the case o 4.5 an!araj5 in that
the ;ud%ment arried at "y the Su-reme Court was on account o the restriction "ein% a
"lan$et restriction on all the shareholders -resent and uture and could not "e im-orted to a
-riate a%reement "etween -articular shareholders.
The eendant too relied on a ew ;ud%ments "ut it was also o"sered "y the !earned Sin%le2ud%e that the dictum in the relied decisions were o no aail as the case on hand was in
relation to a -u"lic com-any whereas the decisions in those res-ectie ;ud%ments are in
concern with the *riate Com-any under which the transera"ility o shares in restricted. t is
held that in case o -u"lic com-any5 Section 111A -roides that the shares or de"entures and
any interest therein o the com-any shall "e reely transera"le.
As aoresaid5 Section 111A is not a law dealin% with the ri%ht o the shareholders to enter into
consensual arran%ementBa%reement "y way o -led%e5 -re+em-tionBsale or otherwise. that
ri%ht is not coered "y Section 111A o the Act as has "een ound "y us5 then consensual
arran%ementBa%reement "etween shareholder and third -arty or shareholders inter se to which
com-any is not a -arty5 Section 3 o the Act will not come into -lay at all. Thus5 the
e>-ression @reely transera"le in Section 111A does not mean that the shareholder cannot
enter into consensual arran%ementBa%reement with the third -arty (-ro-osed transeree) in
relation to his s-eciic shares the com-any wants to een -rohi"it that ri%ht o the
#'7.*.7adhusoodhanan v. ;erela ;amaudi :vt. Ltd.5 (#00&) 11 Com-Cas 13 SC
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shareholders5 may hae to -roide or an e>-ress condition in the Articles o Association or in
the Act and /ules5 as the case may "e5 in that "ehal. The le%al -roision as o"tained in the
orm o Section 111A o the Com-anies Act does not e>-ressly restrict or ta$e away the ri%ht
o shareholders to enter into consensual arran%ementBa%reement in res-ect o shares held "y
him.#
ANALYSIS
(a) This diision "ench has %one into the intent o 111A. The diision "ench has ri%htly held
now that when shares are reely transera"le doesn?t mean that the shareholders lose the ri%ht
to dis-ose o or deal with the shares in the manner in which they li$e.
(") The ench has e>-lained the intent that the section 111A was neer incor-orated to ta$e
away the ri%hts o the shareholders to dis-ose5 which is one o the ri%hts en;oyed "y any
owner o any moa"le -ro-erty. /F/ and other such a%reements are im-ortant e>it
-roisions or any inancial or strate%ic inestor.
(c) This may not "e the last word "ecause this controersy may $noc$ the doors o the
Su-reme court5 "ut certainly it?s a diision "ench ;ud%ment and is the only ;ud%ment in the
case o a -u"lic com-anies o 111 (A) thereore in that sense it certainly it sets aside the
controersy which was raised ri%ht rom the "e%innin% o /an%ara;an rom 133#.
PROISIONUNDERTHECOMPANIESACT 20=3
8o ;ud%ments hae "een cited here5 as it has "een een ' months rom now5 when the act
came into orce. This does not means we should or%et old Com-anies Act5 136 which will
"e a--lica"le or some time and we hae to come "ac$ or to it in -racticeE or orensic or
other historic -ur-ose.
# Somase$har Sundaresan5 @:ublic Company shares cannot be fettered at all5 Aaila"le atDhtt-DBBindiacor-law."lo%s-ot.inB#010B0#B-u"lic+com-any+shares+cannot+"e.html
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shall not "e less than ten thousand ru-ees "ut which may e>tend to one la$h ru-ees lia"le
under section '' o the Act.
P+(%$)"(# *or p"r%o(o( o* %$&r"$o'!"r S"5#o( /;
any -erson deceitully -ersonates as an owner o any security or interest in a com-any5 or
o any share warrant or cou-on issued in -ursuance o this Act5 and there"y o"tains or
attem-ts to o"tain any such security or interest or any such share warrant or cou-on5 or
receies or attem-ts to receie any money due to any such owner5 he shall "e -unisha"le with
im-risonment or a term which shall not "e less than one year "ut which may e>tend to three
years and with ine which shall not "e less than one la$h ru-ees "ut which may e>tend to ie
la$h ru-ees.
Sim-ly5 any -erson5 who deceitully re-resent himsel as holder o any security or interest in
a com-any shall "e -unisha"le with im-risonment and with ine5 minimum ine "ein% one
la$h ru-ees.
RESTRICTIONSONTHETRANSFERABILIT?OFSHARESINPUBLICAND
PRIATECOMPANIES
nMesser !olding v. "h#am Madanmohan Ruia5 The 2ud%e o"sere that @a situation
inolin% a restriction o transera"ility o shares in a -riate com-any has to "e contrasted
with cases inolin% -u"lic com-anies where the law -roides or ree transera"ility. t is
thus held that ree transera"ility o shares is the norm in the case o shares in a -u"lic
com-any.
*riate limited com-any occu-ies a uni=ue -osition in the scheme o the com-any law. t
en;oys seeral -riile%es and e>em-tions as o--osed to a -u"lic com-any. t is immune rom
a num"er o restrictions5 controls and re%ulations5 which a -u"lic com-any is su";ected to. t
has the character o close cor-oration?. The most ital -riile%e a -riate com-any en;oys is
lesser %oernmental control and intererence. t is a "lend o -artnershi- and a limited
lia"ility "ody cor-orate. t en;oys the "eneits and adanta%es o "oth.
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Section &(1) (iii) o the Com-anies Act5 136 deines -riate com-any?#95and sti-ulates our
in%redients that constitute a com-any as a -riate com-any. ne o the our in%redients o the
deinition is that a -riate com-any5 "y its articles5 restricts the ri%ht to transer its shares.
Any restrictions im-osed "y the articles are "indin% u-on the mem"ers o the com-any "y
irtue o Section &6#3o the Act. To what e>tent and in what orm the ri%ht to transer can "e
restricted has "een let to the discretion o these com-anies5 the Act does not -roides any
direction in this re%ard. 4oweer5 conentionally5 certain common restrictie -roisions are
ound in the articles o most -riate com-anies.
Two chie ones o them areD one5 the directors are %ien a"solute and uncontrolled discretion
in the matter o a--roal o transers or re%istration5 and second5 the mem"ers are %ien the
ri%ht o -re+em-tion or -urchasin% the shares oered "y any mem"er. There is5 howeer5
nothin% to limit the restrictions which a com-any?s articles may -lace on the ri%ht o transerE
"ut there cannot "e com-lete etter on the ri%ht.
Althou%h -riate com-anies are ree to im-ose any restrictions5 howeer in character5 on the
ri%hts o transer and -rescri"e any manner in which the shares can "e transerred5 yet the
mandatory -roisions o Section 109 o the Act are as much a--lica"le to the transers o
shares o -riate com-anies as they a--ly to -u"lic com-anies. Furthermore5 the articles
layin% down the manner o transers are e=ually "indin% u-on the mem"ers and the com-any
as well.
t should "e noted that5 as held "y the Su-reme Court V. B. Rangaraj v. V. B. Gopalkrishnan5
the articles o a -riate com-any may contain -roisions restrictin% the ri%ht to transer o
shares5 "ut any restriction outside the articles (e.%.5 a -riate a%reement "etween the
shareholders) is ino-eratie and unenorcea"le. The only restriction on the transer o shares
o a com-any is as laid down in the articles. A restriction which is not s-eciied5 is not
"indin% either on the com-any or on the shareholders. Thus5 an a%reement restrictin% the ri%ht
to transer5 contrary to or inconsistent with the -roisions in the articles5 is not enorcea"le.
#9 eined under Section #(69) o The Com-anies Act5 #01&
#3 Section &6(1) o The Com-anies Act5 136 D ,ect o memorandum and articles as mentioned "elowD Su";ectto the -roisions o this Act5 the memorandum and articles shall5 when re%istered5 "ind the com-any and themem"ers thereo to the same e>tent as i they res-ectiely had "een si%ned "y the com-any and "y eachmem"er5 and contained coenants on its and his -art to o"sere all the -roisions o the memorandum and o the
articles.
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THERIGHTOFFIRSTREFUSALSTILLREMAINSASIGNIFICANTUNRESOLED
CONTROERS?ININDIANCORPORATELAW
/F/s are le%ally enorcea"le as -er the latest diision "ench o the om"ay 4i%h Court.
Accordin%ly Ta%B ra% and similar coenants can also "e considered as enorcea"le "etween
the shareholders a%reein% or such coenants. As on date this is the inal erdict on /F/ as
it is a iision ench decision. Oes it could %et challen%ed in the Su-reme Court5 "ut it is
hi%hly unli$ely that it would %et reersed. And hence this should remain as a %ood law. The
said ;ud%ment may -roide relie to the -riate e=uity inestors re%ardin% enorcea"ility o
their ri%hts culminatin% rom the -riate arran%ements entered into "y them.
ut this inter-retation "y the om"ay 4i%h Court mi%ht "e a "arrier to im-lement as it will
"e ery diicult or the listed com-anies to raise ca-ital5 as they will hae to oer their
shares to the e>istin% shareholders wheneer they wish to raise ca-ital5 they will hae to oer
it to all the e>istin% share holders as such -roision will "e incor-orated in the article o
association5 or instance5 a com-any hain% #00 share holders5 the com-any who is need
o share ca-ital will hae to "eore raisin% the ca-ital5 as$ all the e>istin% #00 shareholders5
and only i they reuse can the com-any %o or the e>ternal sources or hel-.
Thou%h the dratsmen hae enumerated a -roision re%ardin% this in the #01& act5 it would "e
curious to see the a--lication o the same in the uture5 $ee-in% in iew the S, %uidelines &0
issued which said /F/ was le%ally allowed and alid in the Shareholders A%reement. Also
allowed ta% alon% and dra% alon% ri%hts. Throu%h this5 S, has rescinded its -reious
notiication o March 15 #000 that -rohi"ited contracts other than s-ot deliery contracts or
those entered into throu%h the stoc$ e>chan%e mechanism.
Ater all the said laws and decisions %ien "y the arious courts5 it is "elieed that these
-roisions and -reerential clauses shall not "e allowed in the a%reements as the sti-ulates
that -roisions o the Act shall hae the eect notwithstandin% anythin% to the contrary
contained in the Memorandum or Articles o the Association&15 and "y a--lyin% these ri%hts
&0 S, 8otiication on *re+,m-tion /i%hts5 *ut and Call -tions5 ssued on cto"er '5
#01&
&1 Section 3 o the Com-anies Act5 136
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the Section 111A o the Com-anies Act5 136 (which mandates that there can "e no
restriction whatsoeer on the transera"ility o shares in a -u"lic com-any) %ets iolated and
should not "e a--lied at the cost o the statutory laws and or the sa$e o satisyin% the
e>istin% shareholders.
:hile the recent ;ud%ment o Messers 4oldin%s oers strate%ic inestors the much+needed
re-riee5 le%al e>-erts "eliee that some cor-orates are li$ely to $noc$ on the doors o the
Su-reme Court loo$in% or clarity since it has %reat im-act on arious ;oint enture
a%reements across cor-orate ndia.
A S-ecial !eae *etition&&challen%in% the ;ud%ment o the om"ay 4i%h Court in Messer
4oldin%s is -resently -endin% "eore the Su-reme Court. This is a welcome o--ortunity or
the Court to em-hasiLe once and or all that there is nothin% in ndian or ,n%lish le%islation
or case law that ma$es ineectie a -romise "y one contractin% -arty to another in relation to
the dis-osition o his shares in a com-any5 whether -u"lic or -riate.
CONCLUSION
At this -oint it may "e interestin% to ta$e note o the act that The Com-anies Act5 1365
which is a--lica"le to shareholders o all ndian Com-anies5 The Forei%n ,>chan%e
/e%ulation Act5 13& which encom-asses inestment made in ndian Com-anies "y -ersons
resident outside ndia and non ndian -ersons resident in ndia and the istin% le%islations.
Krishna atta5 /i%ht First /eusal5 Cor-orate !aw /e-orter *art '5 ecem"er &5 #01&5
-.'5 Aaila"le atD htt-DBBcor-oratelawre-orter.comB#01&B1#B0&Bri%ht+irst+reusal+contractual+
restriction+transer+sharesB
&& S!* (C) &&'#3+&&'&' o #010
&' Tony Khindria, Scope and Enforceability of Shareholders Agreements, International Business Law Journal,Vol. 2, 1995, pp. 261-271
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t may then "e wisely ar%ued that as lon% as any -roision in the a%reement does not deeat
the -ur-ose o an e>istin% statute5 the same must receie alid reco%nition under the law. n
act5 the Su-reme Court itsel in the cele"rated case o Gherulal (arekh v. Mahadeo Das62
has clearly ruled that the reedom o contract can "e restricted "y law only in cases where it is
incontesta"ly or the esta"lished %ood o the community and courts cannot ino$e new heads
o -u"lic -olicy.&6The court also stated that thou%h sanctity o contract is o -aramount
im-ortance5 yet courts may reliee -arties o their duties under the rule ounded on -u"lic
-olicy which e>tend not only to harmul cases "ut also to harmul tendencies.
sin% this ar%ument5 it would not "e ;ustiia"le or courts to stri$e down the alidity o
shareholder a%reements only on the %round that they are inconsistent with the articles o the
com-any5 een thou%h they conorm to the s-irit o law. -arties in the a%reement5 "y
themseles a%ree to waie certain ri%hts and i the same is not deleterious or other -arties to
the a%reement5 then reedom o contract should not "e rele%ated. n modern times5
shareholder?s a%reements hae assumed %reater im-ortance $ee-in% in mind the %rowin%
olume o international commercial transactions entered into "y the ndian Com-anies.
*arties si%n such a%reements with clarity o mind and awareness. n such circumstances5 it is
indeed not air to allow -arties to eade their duties outlined in the a%reement at their own
conenience sim-ly "ecause the law in ndia is still a%ue re%ardin% the same. The law needsto ta$e co%niLance o -ractical situations that arise in real lie and -rotect such a%reements
alon% with the -arties a%ainst whom the "reachin% -arties ma$e use o the -rotection o law
to %et away without ulillin% their share o duties.
Commercially5 restrictions on transer o shares are common and oten orm the "asis o a
-artnershi- or ;oint enture or inestment arran%ements. The Su-reme Court "y way o its
latest Vodaone ;ud%ement has shown inclination towards enorcea"ility o /F/s -roisions
incor-orated in the S4A. 4oweer5 whether the decision in /an%ara; case has "een truly
oerruled or not is still de"ata"le since the -rinci-le o /F/ discussed in the ;ud%ement was
not dealt as a -art o the /atio o the ;ud%ement. 4oweer5 /F/s are iewed as "onaide
arran%ements o commercial nature entered "etween shareholders and in li%ht o the iew
ta$en "y the Su-reme Court in the Vodaone ;ud%ement aorin% the enorcea"ility o /F/
& 133 SC/ Su--l. (#) '06
&6 *riyoma Ma;umdar5 @2nforceability of *hareholder ,!reements in India3 , Le!al:aradox
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-roision in the S4A5 notwithstandin% the same "ein% incor-orated in the articles o the
associations5 seems li$e a chan%e in the mindset o the ndian 2udiciary.
n li%ht o the reised deinitions under Com-anies Act5 #01& and the recent ;ud%ments5 the
le%al -osition with res-ect to alidity o restrictions on transer o shares o a -u"lic com-any
can "e summariLed as underD
+ An a%reement "etween shareholders restrictin% the transer o shares in a -u"lic
com-any does not iolate the le%al mandate o ree transera"ility o shares o a
-u"lic com-anyE
+ /estrictions on transer o shares as aoresaid5 must not "e in iolation o the articles
o association o the -u"lic com-any or the %oernin% lawE
+ Such a%reement restrictin% transer o shares5 can "e enorced as a contract amon%stand a%ainst the shareholders who are -arty theretoE
+ 4oweer5 such contractual restrictions on transer o shares o a -u"lic com-any are
not enorcea"le a%ainst the com-any5 in case the com-any is not a -arty to the
a%reement containin% such restrictions.
BIBLIOGRAPH?
ARTICLES
1. r.K./. Chandratre estrictions on transfer of shares in a private limited company5
Aaila"le atD htt-DBBwww."casonline.or%BarticlesBartin.as-'3
#. 4emant Shah Controversy on *ection , of the Companies ,ct /015 Aaila"le atD
www.hed%e+s=uare.comBw-+contentBu-loadsB#01#B01Bresources'.-d
&. 8itin *otdar5$"s =ow 2nforceable
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6. S. Muralidharan5 8hen shareholders ,!reement is enforceablenion $f India and another5 #01# (1) 2 &&'
*a%e 2
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9. 8estern 7aharashtra 9evelopment Corporation v. 5ajaj ,uto Ltd.5 (#010) 1'
Com-Cas 3& (om)
REPORTS NOTIFICATIONS
1. A"hi;eet Swaru- 7 Vie$ Kumar A%%arwal52nforceability of :rovisions not formin!
part of the Company 9ocuments5 S, 7 C/*/AT, !A:S5 The Cor-orate !aw
:ee$ly5 Vol.965 Se-tem"er ##5 #009
#. aid . :al$er5ethin&in! the i!ht of "irst efusal5 thStanord 2ournal o !aw5
13335 iscussion *a-er 8o. #615 The 4arard !aw School
&. 2nforceability of provisions not formin! part of the company documents3 ,n analysis
in the law5 S, 7 Cor-orate !aw :ee$ly ssue5 Se-tem"er ##5 #009
'. Krishna atta5i!ht $f "irst efusal5 Cor-orate !aw /e-orter *art '5 ecem"er &5
#01&5 -.'5 Aaila"le atD htt-DBBcor-oratelawre-orter.comB#01&B1#B0&Bri%ht+irst+reusal+
contractual+restriction+transer+sharesB
. /e-ort on Com-anies Act5 #01&5 Aaila"le atD htt-DBBaishm%hrana.meBcom-anies+act+
#01&B
6. /e-ort on Com-anies ill5 Aaila"le atD
htt-DBBwww.thehindu.comB"usinessBndustryBcom-anies+"ill+-assedBarticle00&.ece
. S, 8otiication issued on cto"er &5 #01&5 Aaila"le atD
htt-DBBindiacor-law."lo%s-ot.inB#01&B10Bse"i+notiication+on+-re+em-tion+ri%hts.html
9. S, 8otiication on *re+,m-tion /i%hts5 *ut and Call -tions5 ssued on cto"er '5
#01&
3. The traordinary5 *art 5 S, 8otiication (Mum"ai)5 &rdcto"er5
#01&10. Transer and Transmission o Securities (Com-anies Act5 #01&)5 Aaila"le atD
htt-DBBaishm%hrana.meB#01&B10B01Btranser+and+transmission+o+securities+com-anies+
act+#01&B
STATUTES
1. The Com-anies Act5 136
#. The Com-anies Act5 #01&&. The e-ositories Act5 1336
*a%e 2>o 30
http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://aishmghrana.me/companies-act-2013/http://aishmghrana.me/companies-act-2013/http://www.thehindu.com/business/Industry/companies-bill-passed/article5003777.ecehttp://indiacorplaw.blogspot.in/2013/10/sebi-notification-on-pre-emption-rights.htmlhttp://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://corporatelawreporter.com/2013/12/03/right-first-refusal-contractual-restriction-transfer-shares/http://aishmghrana.me/companies-act-2013/http://aishmghrana.me/companies-act-2013/http://www.thehindu.com/business/Industry/companies-bill-passed/article5003777.ecehttp://indiacorplaw.blogspot.in/2013/10/sebi-notification-on-pre-emption-rights.htmlhttp://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/http://aishmghrana.me/2013/10/01/transfer-and-transmission-of-securities-companies-act-2013/ -
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'. The Securities Contract (/e%ulation) Act5 136
WEBSITES
1. www.manu-atra.com
#. www.indian$anoon.com
&. www.indiancor-law.in
'. www.;stor.or%
. www.lawyersclu"india.com
http://www.manupatra.com/http://www.indiankanoon.com/http://www.indiancorplaw.in/http://www.jstor.org/http://www.lawyersclubindia.com/http://www.manupatra.com/http://www.indiankanoon.com/http://www.indiancorplaw.in/http://www.jstor.org/http://www.lawyersclubindia.com/