Module - VIII Corporate Restructuring

1. Module - VIIICorporate Restructuring Dr. K. Srinivasan Department of Management Studies Christ University, Bangalore

2. Compromise & Arrangement Compromise implies the existence of a dispute such as relating to rights. Compromise means settlement or adjustment of claims in dispute by mutual concessions. • The term arrangement has a wide import. (a) Reorganization of share capital by different class of shares (b) Reorganizing the share capital including interferences with preferential & other special rights. As regards compromise & arrangement in connection with companies, they may be discussed under two heads; they are • Compromise when a company is a going concern • Compromise when a company is being wound up.

3. Compromise, Arrangement – Going Concern Powers Application to the Court Meeting of Members of Creditors Resolution by 3/4th Majority Court’s Sanction Compromise binding all Members & Creditors Copy of the Court order to be filed with Registrar Stay of Suit Appeal

4. Compromise, Arrangement – Winding Company Voluntary Winding Up Special Resolution Notice Dissentient Members

5. Reconstruction & Amalgamation Reconstruction occurs when a company transfers the whole of its undertaking and property to a new company under an agreement by which the shareholders of the old company are entitled to receive some shares or other similar interests in the new company Amalgamation takes place when two or more companies combines into one company, the shareholders of amalgamating companies becoming substantially the shareholders in the amalgamated company. There may be amalgamation either by the transfer of one or more undertakings to a new company or by the transfer of one or more undertakings to an existing company

6. Procedures Considered…. Approval of Scheme by holders of 3/4th in value of Shares Court’s Sanction Certified Copy of the Court order to be filled with the Registrar

7. Acquisition of Shares of Opposing Shareholders • Scheme may involve transfer of shares • Approval of holders of not less than 9/10th in value of the shares • Right to acquire the Opposing Shareholders • Notice to Opposing Shareholders • Registration of transferee Company as holder of shares in Transferor Company • Deposit of money received into a separate bank account .

8. Contentsof Amalgamation Appointed date (or transfer date) of amalgamation. Effective date of amalgamation Capital structure of transferor company and transferee company Share Exchange ratio Transfer of undertaking and liabilities of transferor company to transferee company from the appointed date Continuance of legal proceeding of transferor company by the transferee company after effective date. Transferor company to carry on business on behalf of the transferee company Effect of amalgamation on contracts, services of employees, conditions, effects on retirement benefits Main objects of transferor company and dissolution of transferor company without winding up.

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