Require approval of shareholders to sell - URGENT

[Amar Hussain]

Dear Friends,

There is one unlisted public company and the company wants to sell its land to the brother of its Managing Director.

Does company need to take approval of shareholders or BM enough?

--

Amar 

 

[Ramaswami Mohan]

need special resolution of shareholders at GM , file F 23  and follow it up with a board resolution for the sale of the land. Hope there will be disinterested quorum at the board meeting, otherwise take shareholders approval also for the managing director to execute and sign the sale deed for the agreed price (consideration). 

Views of others welcome,

regards,

Mohan

--
--
************************************************
Mail your comments, feedback and suggestions on CSMysore to Moderator: datta...@gmail.com and Manager: vivekhe...@gmail.com
---
You received this message because you are subscribed to the Google Groups "CSMysore" group.
To unsubscribe from this group and stop receiving emails from it, send an email to csmysore+u...@googlegroups.com.
For more options, visit https://groups.google.com/groups/opt_out.

--
CS. R.  Mohan
Mobile: 9908814677

[Amar Hussain]

Section?

Amar 

 

[Simranjeet Singh]

Section 180(1)(a) of the CA, 2013 will be applicable which requires approval of members accorded by way of SR..

 Thanks & Regards

 ACS Simranjeet Singh

 

[Ramaswami Mohan]

Mr. Simranjeet Singh is right. pl refer: -

180. (1) The Board of Directors of a company shall exercise the following powers only

with the consent of the company by a special resolution, namely:—

(a) to sell, lease or otherwise dispose of the whole or substantially the whole of

the undertaking of the company or where the company owns more than one undertaking,

of the whole or substantially the whole of any of such undertakings.

[Amar Hussain]

But the section does not speak about immovable property like land which needs SR.

The main objects of the company:

To sell, lease, let or mortgage or otherwise dispose of any property of company whether movable or immovable.

With this, can company sell the land with the permission of Board of Directors.  Because the price for land is according to the market price.

Please reply.

[Amar Hussain]

Dear Friends : Mohan and Simran

While reading Ramaiya Book on The Companies Act, I came across these case laws and these are for information.

CASE LAW:  Brady v. Brady, 1988 BCLC 579 : (1988) 2 All ER 617 (HL)

Where the objects clause of a company enabled it to dispose of its assets for such consideration as it thought fit, this was held to authorise a transfer in consideration of the promise of the transferee or a third party to pay to the company the value of assets transferred and the transaction was, therefore, not ultra vires the company.  Furthermore, the Court said that it made no difference that the promise was provided by a parent or associated company or that the parent or associated company's only assets were shares in the company.   The proposed transaction was also not a misfeasance on the part of the directors or fraud on the creditors of the company because the transaction was carried out not only with the knowledge and assent of all the shareholders but with their active co-operation and at their instigation, the company being also solvent with a considerable surplus of assets over liabilities.

CASE LAW: Joint Receivers and Managers of Niltan Carson Ltd. v. Hawthorne, (1988) BCLC 298 (QBD) 

      

      

Where the managing director of a company acting on its behalf granted a lease of the hotel premises to another director without the necessary approval of the shareholders, it was held that the person challenging the validity of the transaction would have to show that proper value was not taken, which was not done.  Furthermore, the Court noted that the purchasing director had acted throughout with complete honesty and 

openness and with the agreement of the managing director and practically all of the shareholders that she should run the community home independently of the company.   The transaction was not voidable at the instance of the company.

[Ramaswami Mohan]

Dear Mr. Amar Hussain,

it depends on what is the percentage of the value of the land held by ur client company with reference to the total assets of the company. if it is not a major portion (less than 50 %) then you can go with a Board Resolution with a disinterested quorum's presence. 

But in the light of the CA 2013 a special resolution would be required (as against what was prevailing in CA 1956) .

Views of other Members welcome,

Regards,

Mohan