Ans. 1.

(a) (i) As per the IBC,2016, that without initiating CIRP against the principal borrower, it is open to the FC to initiate CIRP under section 7 against corporate guarantors as the creditor is also the FC qua corporate guarantor.

(ii) In terms of Section 5(22) “personal guarantor” means an individual who is the surety in a contract of guarantee to a corporate debtor. In the given case ‘Sandhya’ is the personal guarantor of the Company. Section 60(1) of the IBC provides that the Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located.

 

(b) The basic requirements as to acquisition of shares mentioned in Section 235 of the Companies Act, 2013 are as follows:-

1. The scheme or contract involving the transfer of shares in a company (transferor company) to another company (transferee company) has been approved by the holders of not less than 9/10th(90%) in value of the shares whose transfer is involved.

2. The approval of 9/10th shareholders in value shall be received within 4 months after making of an offer in that behalf by the transferee company.

3. The transferee company shall express his desire to acquire the remaining shares of dissenting shareholder in 2 months after the expiry of the said 4 months and shall give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares.

• The transferee company shall be entitled as well as bound to acquire the shares of the dissenting shareholders where no application is made by any dissenting shareholders to the tribunal in 1 month of receipt of notice of acquisition of shares or where an application is made by any dissenting shareholder but such application is dismissed by the tribunal.

• In the given case since application made by the dissenting shareholders has been dismissed by the tribunal hence A Ltd is entitled and bound to acquire all the shares of the dissenting shareholders i.e. entire 8% shareholding.

• Since A Ltd only acquired 5% shareholding of the dissenting shareholders hence this is in contravention of Sec 235 of the Companies Act, 2013. Hence the takeover is invalid.

• (c) Corporate Person In terms of Section 3(7) of the IBC “corporate person” means a company as defined in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider.

• Who is Financial Service Provider In term of Section 3(17) “financial service provider” means a person engaged in the business of providing financial services in terms of authorisation issued or registration granted by a financial sector regulator. CIRP cannot be initiated against a financial service provider/non-banking financial company as financial service providers are excluded from definition of corporate debtor in terms of section 3(7) of the Insolvency Bankruptcy Code, 2016

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