Module - VIII Corporate Restructuring

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

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Compromise, Arrangement Going Concern Powers

1. Application to the Court
2. Meeting of Members of Creditors
3. Resolution by 3/4th Majority
4. Courts Sanction
5. Compromise binding all Members Creditors
6. Copy of the Court order to be filed with
   Registrar
7. Stay of Suit
8. Appeal

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Compromise, Arrangement Winding Company

1. Voluntary Winding Up
2. Special Resolution
3. Notice
4. Dissentient Members

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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
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Procedures Considered.

1. Approval of Scheme by holders of 3/4th in value
   of Shares
2. Courts Sanction
3. Certified Copy of the Court order to be filled
   with the Registrar

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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 .

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Contents of Amalgamation

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

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