Section 27 of CA 2013 : Section 27: Variation In Terms Of Contract Or Objects In Prospectus

Explanation using Example

Imagine a company called "GreenTech Innovations Ltd." which raised funds through a prospectus with the promise of investing in the development of eco-friendly technologies. A year later, the company finds a new market opportunity in the manufacturing of electric vehicles, which was not part of the original objectives stated in the prospectus.

To pursue this new venture, GreenTech Innovations Ltd. needs to vary the terms of the original contract with its investors. According to Section 27 of the Companies Act, 2013, the company must call a general meeting and propose a special resolution to get the approval of its shareholders to change the objectives. They publish the details of the proposed resolution in both an English and a vernacular language newspaper in the city where their registered office is located, providing justification for the change.

However, some shareholders do not agree with this new direction. To protect their interests, as per the Act, GreenTech Innovations Ltd. must provide these dissenting shareholders with an exit offer. This offer includes a fair price for their shares, allowing them to sell back their shares to the promoters or controlling shareholders under the conditions specified by the Securities and Exchange Board regulations.