The legal framework under the Companies Act, 2013 (“2013 Act”), has not enacted adequate provisions for ‘squeeze-out’ of minority shareholders. Under the circumstances, selective capital reduction has emerged as an interesting and legally viable option for companies that intend to give an exit to the minority shareholders. Selective capital reduction is also very useful for giving an exit option to minority shareholders in specific scenarios, such as to the remaining shareholders, post the completion of delisting process. Many multinational companies, which chose to delist their securities, have adopted this route to give an exit to the remaining minority shareholders, who did not participate in the delisting process.
Continue Reading Exit to minority – Is selective reduction of capital a viable option?