Governing unlisted firms

Proposed norms are in the right direction

The government is reportedly working on a Takeover Code for unlisted companies. Unlike listed ones, transfer of shares in unlisted firms in India now happen on the basis of other contracts and agreements between shareholders. Although the provisions were added in the Companies Act, they have not been implemented so far due to the lack of a Takeover Code. The Code will allow entities owning 75 per cent equity in an unlisted company to trigger a takeover of the rest of the shareholding by approaching the National Company Law Tribunal. Provisions in the Companies Act give an option to minority