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Business Restructuring
Financial Restructuring
Business Restructuring
Compromise
(Dispute)
Arrangement
(No dispute)
Reorganisation
of Capital
Reconstruction
Consolidation / Subdivision
Reduction of Capital
Internal
External
Demerger
Amalgamation
Arrangement
1. Debenture holders extending time for repayment, accepting less
than the face value
2. Debenture holders giving up their security, partly or fully,
exchanging their Debentures for Shares in the Company or in a
New Company
3. Creditors taking payments of their claims and balance in Shares
or Debentures of the Company
4. Preference Shareholders giving up their rights to arrears of
dividend
5. Preference Shareholders agreeing to accept reduced rate of
dividend
6. Shareholders transferring their Shares to another Company
7. Modifying the rights of Shareholders
8. Buy-back of Shares held in small lots
9. Severance of Holding-Subsidiary connection by transferring by
Holding Company its shareholding in the Subsidiary to another
Company and allotment of Shares by it to the Shareholders of the
Holding Company
Section 391
(complete Code for Single window clearance
Refer Slide 12
since authenticated financial statements were not placed before the meeting Bharat Synthetics Ltd Vs bank of India (1995)
Section 393
Company must ensure that it sends Explanatory Statement
along with the Notice for calling the meetings of creditors or
members.
Such statement must show all material facts relating to any
such Compromise or arrangement.
Section 394
Where application under Section 394 covers amalgamation of two
or more companies i.e. transfer of assets and liabilities from the
Transferor Company to the Transferee Company, the CLT order
may cover the following: 1. Transfer of the Undertaking, Assets and Liabilities from the
Transferor Company to the Transferee company
2. Allotment of shares, debentures etc by the Transferee Company to
those who are entitle to as per the scheme
3. Continuation of any legal proceedings by or against the
Transferor Company or vice versa
4. Dissolution, without Winding Up, of the Transferor Company
5. Protect the interests of those who dissent from such scheme.
6. CLT to obtain from Registrar and Liquidator a report that the
affairs of the company are not being conducted in a manner
prejudicial to the interests of members or public interest.
7. Certified copy of the CLT order must be filed with the Registrar
within 30 days
Section 394 A
CLT must give Notice to the Central Govt of every
application made under S. 391 and S. 394.
CLT shall take into account any representation made by the
Central Govt before passing any order
Supreme Court has held in the case of Hindustan Lever Employees Union Vs
HLL (1995), that the share exchange ratio worked out by the valuation
experts would be accepted unless
Valuer considered the Yield Value, the Asset Value and the Market
Value with appropriate weightage for working out exchange ratio.
Valuation of shares is a technical matter which requires considerable skill and
expertise. There are bound to be differences of opinion as to the correct value
of shares. The courts approach would be that of non-interference as long as
the shareholders of both the companies accept the valuation.
Similar view has been taken by the High Court in the case of Coimbatore
Cotton Mills.
In the case of Piramal Spinning and Weaving Mills Ltd (1980), the High Court
held that unless the person who challenged the valuation satisfied the court
that the valuation arrived at is grossly unfair, the court would not disturb the
scheme of amalgamation approved by the shareholders of the two companies.