Section 238 - Arrangement or merger by sale of undertaking

(1) Despite any other provisions on arrangements or mergers in this Act, a company may, with a view to effecting an arrangement or merger, resolve by special resolution that,

(a) the company be put into a voluntary liquidation of members, and

(b) the liquidator be authorised,

(i) to sell the whole or part of the undertaking or assets of a company to another body corporate, whether a company within the meaning of this Act or not, in this Part called the transferee company, in consideration or part consideration of fully paid shares, debentures or other like interests in the transferee company, and

(ii) to distribute those shares, debentures or other like interests in specie among the members of the company in accordance with their rights in the liquidation.

(2) A sale and distribution in pursuance of a special resolution is binding on the company and the members of the company, and each member shall be deemed to have agreed with the transferee company to accept the fully paid shares, debentures or other like interests to which that member is entitled under the distribution.

(3) For the purposes of subsection (2), if

(a) within one year from the date of the passage of the special resolution, an order is made under section 219 or for the winding up of the company under the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), the arrangement or merger and the sale and distribution shall not be valid unless sanctioned by the Court; or

(b) a member of the company, by notice in writing addressed to the liquidator and left at the registered office of the company within twenty-eight days after the passage of the resolution, dissents from the arrangement or merger in respect of all of the shares held by that member, the liquidator shall abstain from carrying the resolution into effect or shall purchase the shares at a price to be determined in a manner provided by subsections (4), (5) and (6) of this section.

(4) Where the liquidator elects to purchase the shares of a member who has expressed dissent in accordance with subsections (2) and (3) of this section, the price payable for the shares shall be determined by agreement or, in default of agreement, by a single arbitrator appointed by the Institute of Chartered Accountants in the country in accordance with the Alternative Dispute Resolution Act, 2010 (Act 798).

(5) The price shall be determined by estimating what the member concerned would have received had the whole of the undertaking of the company been sold as a going concern for cash to a willing buyer and the proceeds, less the costs of liquidation, been divided amongst the members in accordance with their rights.

(6) The purchase money shall be paid before the company is dissolved and raised by the liquidator in the manner that may be determined by the special resolution or, in default of a direction in the special resolution, in the manner that the liquidator thinks fit as part of the expenses of the winding-up.

(7) This section does not authorise a variation or an abrogation of the rights of the creditors of the company.

(8) If a company otherwise than under this section

(a) sells or resolves to sell the whole or a part of the undertaking or assets of the company to another body corporate in consideration or part consideration of shares, debentures or other like interest in that body corporate, and

(b) resolves to distribute the proceeds in specie among the members of the company, whether in a liquidation or by way of dividend,

a member of the company may, by notice in writing addressed to the company and left at the registered office of the company within twenty-eight days after the passage of the resolution authorising the distribution, require the company to abstain from carrying the resolution into effect or to purchase any of the shares of that member at a price to be determined in the manner provided by subsections (4), (5) and (6).

(9) Subsection (8) does not authorise a company to

(a) purchase the shares of the company except in accordance with sections 61 to 66; or

(b) make a distribution to the shareholders except in accordance with section 72 and sections 75 to 82 or in a liquidation.