Can a private Limited Company acquire another Private Limited Company exclusive? If can what are the procedures ? How many ways acquisition of a private limited company can take place?
A Company is regarded as law as a single person. It has legal personality. There is no specific provisions in the Companies Act 1994 about the procedure how a Private Limited Company acquire another Private Limited Company. But from Many case references we can say that a company can amalgamate with another company. But this power must be in the memorandum of the company. If it is not there it should be acquired by altering the memorandum. If any company wants to acquire property of another company it should be placed before the shareholders. Approval must be accorded by at least nine-tenth in the value of the shares whose transfer is involved. If any Private Limited Company acquires another Private Limited Company it needs Special Resolution mentioned in Section 12 of the Companies Act 1994. This section provides Alteration of Memorandum.
Sec.12. Alteration of Memorandum: (1). Subject to the provisions of this Act, a company may, by special resolution, alter the provisions of its memorandum with respect to the objects of the company, so far as may be:
(a). to carry on its business more economically or more efficiently: or
(b). to attain its main purpose by new or improved means; or
(c). to enlarge or change the local area of its operations; or
(d). to carry on some business which under the existing circumstances, may conveniently or advantageously be combined with the business of the company; or
(e). to restrict or abandon any of the objects specified in the memorandum; or
(f). to sell or dispose of the whole or any part of the undertaking of the company; or
(g). to amalgamate with any other company or body of persons; or
(2). The alteration shall not take effect until, and except in so far as it is confirmed by the court on petition.
(3). Before confirming the alteration, the Court must be satisfied-
(a). that sufficient notice has been given to every share holder of debenture of the company, and to any person or class of persons whose interest will, in the option of the court , be affected by the alteration; and
(c). that, with respect of every creditor who in the opinion of the court is entitled to object, and who signifies his objection in manner directed by the Court, either his consent to the alteration has been obtained or his debt or claim has been discharged or has been determined or has been secured to the satisfaction of the court.
Provided that the Court may, in the case of any person or class, for special reasons, dispense with the notice required by this section.
According to Section 87 (2) of the Companies Act 1994, “A resolution shall be a special resolution when it has been passed by such a majority as is required for the passing of an extraordinary resolution and at a general meeting of which not less than twenty-one days’ notice specifying the intention to propose the resolution as a special resolution has duly been given: provided that if all the members entitled to attend and vote at any such meeting so agree, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one days’ notice has been given.” Again Section 87 (1) suggests that “An extraordinary resolution has to be passed by a majority of not less than three-fourths of such members entitled to vote as are present in person or by proxy.” That means a special resolution requires two criteria: (i) twenty-one days’ notice for the general meeting specifying the intention to propose the resolution as a special resolution & (ii) resolution has to be passed at the general meeting by a majority of not less than three-fourths of such members who are entitled to vote as are present in person or by proxy.
Now the question arises what would happen if the minority shareholders, who have not voted in favour of the special resolution, brings an action before the court against the resolution. There is specific provision in Section 233 of the Companies Act, 1994 as regard to protection of minority interest.
Section 233: Power of Court to give direction for protecting interest of the minority:
(a) the affairs of the company are being conducted or the powers of the directors are being exercised in a manner prejudicial to one or more of its members or debenture-holders or in disregard of his or their interest;
(b) the company is acting or is likely to act in a manner which discriminated or likely to discriminate the interest of any member or debenture-holder;
(c) a resolution of the members, debenture-holders or any class of them has been passed or is likely to be passed which discriminates or is likely to discriminate the interest of one or more of the members or debenture-holder;
and pray for such order as , in his or their opinion, would be necessary for safeguarding his or their interest and also the interest of any other member or debenture-holder.
(a). to cancel or modify
(b). to regulate the conduct of the company’s affairs in future in such manner as is specified therein;
(c). to amend any provisions of the Memorandum and Articles of the company.
04. Where, by an order of the Court, any amendment is made in the memorandum or article of the company, the company shall not, without leave of the Court, make any amendment thereto or take any action which is inconsistent with the direction contained in the order.
05. A company shall within 14 days from the making of an order under this section, inform the Registrar in writing of such order and send him a copy thereof, and if the company makes default in complying with this sub-section, the company, and also every officer of the company who is in default, shall be liable to a fine not exceeding one thousand taka.
Section 233 read with section 195 contemplates that holders of one-tenth of shares in the case of a company having a share capital and one fifth of the members in case of a company not having a share capital, are eligible to apply. Again Dhaka High Court has held that unless the applicants are minority shareholders, i.e., less than fifty percent, they have no right to apply for protection under this section.
Therefore, we can narrow down our observations in the following manner: