REMOVAL OF SHAREHOLDERS

[S.C. WADHWA]

A Pvt. Ltd. Co. has six shareholders out of which four shareholders holds 70 percent of total shares while other two shareholders holds remaining  30 percent . Shareholders who holds 70 percent shares want to remove shareholders show holds 30 percent . Please tell whether this is possible. If so, what is the procedure.

If this is not possible, is there any means that value of shareholding of  shareholders who holds 30 percent shares can be brought to 2 percent or 3 percent .

[DR.MARIAPPAN GOVINDARAJAN]

There is no provision in the Companies Act to remove the shareholders. Their shares may be bought. If they are not willing to sell their shares further shares may be issued as to reduce the percentage of them.

AI Summary

Removal of shareholders not permitted; majority shareholders must buy shares or issue new shares to dilute minority holdings. There is no statutory mechanism to remove shareholders; the available remedies are to purchase the minority's shares if they agree to sell, or to issue further shares to dilute the minority's percentage holding.