Section 238 of Companies Act, 2013 – Registration of offer of schemes involving transfer of shares

SECTION 238. REGISTRATION OF OFFER OF SCHEMES
INVOLVING TRANSFER OF SHARES

[Effective from 15th December, 2016]

(1) In relation to every offer of a scheme or contract involving the transfer of shares or any class of shares in the transferor company to the transferee company under section 235,—

(a)   every circular containing such offer and recommendation to the members of the transferor company by its directors to accept such offer shall be accompanied by such information and in such manner as may be prescribed;

(b)   every such offer shall contain a statement by or on behalf of the transferee company, disclosing the steps it has taken to ensure that necessary cash will be available; and

(c)   every such circular shall be presented to the Registrar for registration and no such circular shall be issued until it is so registered:

Provided that the Registrar may refuse, for reasons to be recorded in writing, to register any such circular which does not contain the information required to be given under clause (a) or which sets out such information in a manner likely to give a false impression, and communicate such refusal to the parties within thirty days of the application.

(2) An appeal shall lie to the Tribunal against an order of the Registrar refusing to register any circular under sub-section (1).

(3) The director who issues a circular which has not been presented for registration and registered under clause (c) of sub-section (1), shall be [2] [liable to a penalty of one lakh rupees].

Applicable Rules

Companies (Compromises, Arrangements and Amalgamations) Rules, 2016

[Effective from 15th December, 2016]

[1][Rule 28. Circular containing scheme of amalgamation or merger.— (1) For the purposes of clause (a) of sub-section (1) of section 238 of the Act, every circular containing the offer of scheme or contract involving transfer of shares or any class of shares and recommendation to the members of the transferor company by its directors to accept such offer, shall be accompanied by such information as set out in Form No. CAA.15.

(2) The circular shall be presented to the Registrar for registration.

 Rule 29. Appeal under sub-section (2) of section 238 of the Act.— Any aggrieved party may file an appeal against the order of the Registrar of Companies refusing to register any circular under sub-section (2) of section 238 of the Act and the said appeal shall be in the Form No. NCLT.9 (appended in the National Company Law Tribunal Rules, 2016) supported with an affidavit in the Form No. NCLT.6 (appended in the National Company Law Tribunal Rules, 2016).

SCHEDULE OF FEES
S. No.	Sections of the Companies Act, 2013	Rule Number	Nature of application or petition	Fees
1.	Sub-section (1) of section 230	3 (1)	Application for compromise arrangement and amalgamation	Rs. 5,000/-
2.	Sub-section (2) of section 235		Application by dissenting shareholders	Rs. 1,000/-
3.	Sub-section (2) of section 238	29	Appeal against order of Registrar refusing to register any circular.	Rs. 2,000/-

 ]

[1] Inserted by Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 vide Notification No. G.S.R 1134(E) dated 14th December, 2016.

[2] Substituted by The Companies (Amendment) Ordinance, 2019 dated 12th January, 2019 effective from 2nd November, 2018.Prior to substitution it read as under:-

“punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees.”