Case Law Details
In a recent judgement of Western Maharashtra Development Corporation Limited vs. Bajaj Auto Limited, the Bombay High Court has held (among other things) that in case of a “public company”, its shares are freely transferable under the Companies Act, 1956 (the Act) even if the Articles of Association (the Articles) contain restrictive provisions relating to transfer of shares.
Background:
One of the distinctions between private companies and public companies is with regard to freedom to transfer shares as is evident from the definitions in the Act. The definition of “private company” and “public company” as per the Act relevant to this alert are reproduced below:
“private company” means a company which has a minimum paid-up capital of ….. as may be prescribed, and by its articles,
(a) restricts the right to transfer its shares, if any;
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