Right of First Refusal Is Not a Restriction on Free Transferability Under Section 111
 

The concept of free transferability of shares in a public company under section 111A of the Companies Act, 1956 is perhaps the most significant unresolved controversy in contemporary Indian corporate law. Time and again the issue has arisen whether the right of first refusal (pre-emptive rights) in the shareholders' agreement and joint venture agreement constitute restriction on the free transferability of shares. Right of first refusal is a commonly used device in the corporate world.

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