Question

question) Leela Private Ltd have 40 members. A few members signed it that the company is not hence they have decided to transfer their shares to raise the money for this need. State giving justified reasons to your answer whether the share of this company can be transferred or not.



please send the answer class 11th question ​

Answer 1

Explanation:

Transferability of shares in a privately held company is governed by ... to buy requires that if a member wishes to sell some or all of his ...

Answer 2

Answer:

Transferability of shares in a privately held company is governed by the Articles which is a document that lays down the rules and regulations regarding share capital transfer, transmission, board of directors, general meetings and winding up, among others.

Section 2(68) of the Companies Act 2013 provides that the Articles of a private company shall restrict the right to transfer the company’s shares. This restriction is binding upon the company and members thereof. In other words, if the restriction is not mentioned in the Articles and is enforced by way of a private agreement between shareholders, it is not binding either on the company or on the shareholders.

It is important to note that the restriction on transfer is not applicable in the following cases:

Where the member transfers the shares to his/her representative(s)

Where the shares have been devolved to the heirs in the event of death of a shareholder

Where shares are proposed to be allotted on a rights basis and the existing shareholders renounce their shares, these shares will be allotted to the renouncees

Pre-emption provision

The right of pre-emption or first option to buy requires that if a member wishes to sell some or all of his shares, such shares shall first be offered to other existing members of the company at a price determined by the directors or company’s auditors or by using the formula set out in the Articles. If the existing members do not wish to exercise their pre-emptive right, the shares can be transferred by the transferor to the proposed transferee.