TaxTMI 
TaxTMI 
TaxTMI 
1979 (6) TMI 118
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....any having an authorised capital of Rs. 2 crores and a paid up share capital of Rs. 98 lakhs. It is, however, a very closely held company having only 12 shareholders, although it is a public limited company. The transferee-company is a small company with a paid-up capital of only Rs. 5 lakhs. It is a new company incorporated only in 1978. The shareholders of the transferor-company are also some of the shareholders in the transferee-company. The shares of the transferee-company are, however, distributed among a larger number of shareholders than the transferor-company. The transferee-company's shares are listed on the stock exchange while the transferor-company's shares are not so listed. Under the scheme of amalgamation, 7 shares of the tra....
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....t should have been 1 : 2.5 instead of 1 : 1.75. The divergence of opinion in this connection has arisen mainly on account of a certain number of bonus shares which were issued by the transferor-company in the year 1978. Prior to the issue of these bonus shares, the share capital of the transferor-company consisted of 5,60,000 shares of Rs. 10 each. After the issue of bonus shares, the total number of shares became 9,80,000 of Rs. 10 each. According to the Regional Directoriof the Company Law Board, in order to determine the value of the shares of the transferor-company on the capitalization of yield basis, in each of the previous 5 years, the profits of each year after capitalization should have been divided by the number of shares in that ....
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....uation which are available for valuing the shares of a company. The valuation of shares is a technical matter which requires considerable skill and expertise. There are bound to be differences of opinion as to what the correct value of the shares of any given company is. Simply because it is possible to value the shares in a manner different from the one which has been adopted in a given case, it cannot be said that the valuation which has been agreed upon is unfair. What is important in the present case is that all the shareholders of both the companies have unanimously accepted the valuation which has been arrived at by the auditors of the transferor and transferee companies. Under these circumstances, the application cannot be rejected o....
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.... Chinai, who appears for the Regional Director of the Company Law Board, has stated that there is nothing contrary to public interest in the scheme of amalgamation which is before me. What is more important, if the contention of the Regional Director is correct, then the shares of the transferor-company have been undervalued. The transferor-company is a larger company having assets worth about Rs. 2 crores. Its shares are very closely held by 12 shareholders only. There is a greater public participation in the shareholding of the transferee-company. If at all there is undervaluation, then, it is the shareholders of the transferee-company who benefit thereby ; that is to say, the company which has a larger public participation benefits by ....