Statement : Allegations have been made by the Minority Shareholders that ABC's promoters sold the optionally convertible preference shares and redeemable preference shares to a trust controlled by ABC's promoters at prices significantly below their fair market value, thereby causing a financial loss to ABC and its shareholders. What is the recourse for minority shareholders under law ?
Conclusion I : The Minority Shareholders can file for class action under Section 245 of the Companies Act, 2013, seeking directions from NCLT to either reverse the sale of optionally convertible preference shares and redeemable preference shares or to compensate the Minority Shareholders.
Conclusion II : The aggrieved members may proceed individually to protect their rights against acts of oppression or mismanagement under Section 241 of the Companies Act, 2013.
In the context of the above Statement and Conclusions, which one of the following is correct ?
AIBE - 2026,
Answer: B
Both Conclusions I and II follow.
Section 245 of the Companies Act, 2013 lets a prescribed number of members or depositors file a class action before the National Company Law Tribunal if they believe the company's affairs are being conducted prejudicially to its interests or theirs. The Tribunal may restrain the company or its directors from acts that breach the law, and award damages or compensation against the wrongdoers. A sale of the company's preference shares to a promoter-controlled trust at an undervalue fits that remedy, so Conclusion I follows.
Section 241 separately lets members who qualify under Section 244 apply to the Tribunal for relief against oppression and mismanagement, and the Tribunal may waive the qualifying thresholds. That is the remedy in Conclusion II. The two remedies coexist, so options accepting only one, or neither, are too narrow.
Please log in or register to report this question.