Corporate Mergers and Acquisitions Quiz

Chapter 5: Compromises, Arrangements and Amalgamations

• This chapter covers the concepts of compromise, arrangement, merger and amalgamation.
• Learning outcomes include explaining the different concepts and the powers of various entities (Company, Members, Central Government, Tribunal) in relation to these concepts.
• Understanding fast-track mergers, cross-border mergers and amalgamation in the public interest is also covered.
• The role of shareholders dissenting from a scheme or contract and the purchase of minority shareholding are part of the discussed topics.

5.2 Introduction

• Mergers and acquisitions are common corporate restructuring topics.
• Key terms like compromise (peaceful dispute settlement), arrangement (modifying rights), and amalgamation (combining companies) are explained
• These terms relate to different situations, with compromise usually involving a dispute and arrangement modifying existing rights.
• Amalgamation encompasses a broader spectrum of actions, such as a creditor waiving dues, converting creditor dues to shares or reducing share capital by members, among others.

5.3 Types of Amalgamations

• Amalgamations can be categorized as mergers or purchases.
• Mere pooling of assets and liabilities qualifies as a merger
• Purchase involves the transfer of only assets and liabilities.
• There are accounting methods distinctive for each type.

5.4 Corporate and Economic Laws

• Section 230 deals with the powers of a tribunal regarding compromise and arrangement.
• Information disclosure by applicants, notice of meetings, and roles of various parties like members and credit holders.
• A tribunal's role in enforcing compromise and arrangement is also explained
• Important disclosures and processes are detailed
• Provisions relating to Compromises, Arrangements and Amalgamations (Chapter XV) are explicitly covered

5.5 Compromises, Arrangements and Amalgamations

• Provisions concerning takeover of listed companies, discussions on how certain aspects of financial schemes and arrangements are regulated are within this section.
• Different regulations and authorities are detailed (e.g., SEBI, RBI)
• The text covers numerous types of amalgamations, including fast-track and cross-border arrangements.

5.6 Power to Compromise or Make Arrangements with Creditors and Members

• The powers of the various parties in a compromise or arrangement scenario are defined
• Section 230 of Companies Act, 2013 includes the basic procedures
• Approval of schemes by stakeholders and related NCLT powers are elaborated

5.7 Compromises, Arrangements and Amalgamations

• Tribunal's powers to call meetings of creditors or members are described
• Explains the conditions under which a meeting of creditors or members needs to be held, and the appropriate order
• Importance of the explanation for the term 'arrangement', which encompasses capital restructuring

5.8 Corporate and Economic Laws

• Disclosures by applicants in compromise or arrangement cases are explained.
• The roles of various entities (e.g., auditors, stakeholders, valuation reports), disclosures, and the legal aspects are covered.
• Details about the notice of meetings and the related process
• The text specifies procedures and responsibilities for issuing notices, sending them to various entities, publications, and timelines

5.9 Compromises, Arrangements and Amalgamations

• Notices related to meetings are detailed
• How companies must advertise schemes.

5.10 Corporate and Economic Laws

• Voting on compromise or arrangement is detailed
• Notices to sectoral regulators and other relevant authorities are explained
• Important aspects for corporate restructuring are described

5.11 Compromises, Arrangements and Amalgamations

• Procedure for Tribunals to enforce compromises or arrangements are given
• Explanation on specific circumstances where the procedure will be followed

5.12 Corporate and Economic Laws

• Various provisions and aspects of dealing with takeovers, including disclosures and liabilities.

5.13 Compromises, Arrangements and Amalgamations

• Explanation on Tribunal's powers in enforcing and giving directives related to processes of compromise or arrangement
• Powers and duties of various entities involved in the mentioned process like Tribunal and other stakeholders are explained

5.14 Corporate and Economic Laws

• Winding-up procedures in relation to compromises or arrangements are described
• The text details the retrospective effect of orders on companies regarding the processes.

5.15 Merger and Amalgamation of Companies

• The text explains how Section 232 empowers the NCLT to order mergers or amalgamations.
• Section 232 details the filing of applications for reconstructions involving mergers/amalgamations.
• The text covers the circulation of information for meetings by the merging companies.

5.16 Corporate and Economic Laws

• The provisions and the requirements related to the approval of compromise or arrangement scheme by the Tribunal.
• The order made by the Tribunal are explained.
• Legal processes and related provisions for merging or amalgamating companies' proceedings are elaborated.

5.17 Corporate and Economic Laws

• The effect of an order of the Tribunal in various scenarios (transfer of property, liabilities, charges)

5.18 Corporate and Economic Laws

• Includes procedures like filing a certified copy of the Tribunal's order

5.19 Corporate and Economic Laws

• Explanation on scheme involving merger.
• Explanation on scheme involving a new company formation.

5.20 Corporate and Economic Laws

• Cases related to scheme of amalgamation, and the different aspects, issues, and possible objections in the mentioned case
• A case describing the power of the Tribunal regarding scheme of arrangement.
• Procedure, related issues and explanations for acquiring shares of shareholders dissenting from schemes or contracts

5.21 Compromises, Arrangements and Amalgamations

• Detailed explanation of various processes and requirements in a scheme of acquisition of dissenting shareholders.

5.22 Corporate and Economic Laws

• Provisions on separate bank accounts for distributions to stakeholders when dealing with specific situations

5.23 Compromises, Arrangements and Amalgamations

• Provisions about notifying purchase of minority shareholding
• Describing the offer made by a person or group intending on purchasing minority shares.

5.24 Corporate and Economic Laws

• Explains the deposit of purchase amounts for minority shareholding in a separate bank account.
• Provides details on company acting as a transfer agent in purchase situations.
• Describes the company's obligation to issue new shares when there is no physical delivery of shares within the specified timeframe.
• Describes the shareholders' rights to offer shares for sale

5.25 Corporate and Economic Laws

• Rights of shareholders and procedures to purchase minority shares,
• Explanations about situations where schemes of compromise or arrangement are proposed involves the creation of a new company
• Determination of price for the purchase of minority shares

5.26 Corporate and Economic Laws

• Explanations on various cases and situations and provisions related to minority share acquisition or the process of share takeover, and different points in the scheme

5.27 Corporate and Economic Laws

• Explains the power of the Central Government to order amalgamation in the public interest
• Includes explanation on the Continuation of legal proceedings.

5.28 Corporate and Economic Laws

• The provisions, roles, and responsibilities in matters of interest and compensation entitlement for creditors and members

5.29 Registration of Offer of Schemes Involving Transfer of Shares

• The text covers the process of registering schemes for share transfers and related procedures.
• The procedure, disclosure requirements, and the registrar's specific role.

5.30 Preservation of Books and Papers of Amalgamated Companies

• Explains the legal aspects relating to preservation of books and papers of amalgamated companies.
• Explains the liability of officers.

5.31 Fast Track Mode of Merger or Amalgamation of Certain Companies

• Explains the procedure for a fast-track merger or amalgamation of companies.

5.32 Corporate and Economic Laws

• Section 232 explains possible merging situations (e.g., between two or more companies, holding and wholly-owned subsidiaries)
• The conditions that need to be met to initiate a merger

5.33 Corporate and Economic Laws

• Procedure and provisions as to how the scheme involving transfer of shares needs to be registered.
• Includes details on filing applications with the tribunal or other relevant bodies.
• Provisions relating to the scheme of compromise/arrangement.

5.34 Corporate and Economic Laws

• The effects of a scheme's registration on the transferor and transferee companies.
• Details on the transfer of property, liabilities, and charges
• Legal proceedings and the continuation or discontinuation.

5.35 Corporate and Economic Laws

• Filing of applications by transferee.
• Provisions regarding applicability to other situations like compromise arrangements,
• The text includes information about merging with a foreign company and the specific conditions that apply.

5.36 Corporate and Economic Laws

• Discusses the merging procedure for foreign companies and Indian companies.

5.37 Test Your Knowledge (Multiple Choice Questions)

• Multiple Choice Questions testing knowledge of the topics related to compromises, arrangements, and amalgamations.

5.38 Corporate and Economic Laws

• Provides examples and scenarios for further understanding the process of compromise, arrangement, and amalgamation
• Addresses specific questions and points in the provided examples

5.39 Corporate and Economic Laws

• Explains the Central Government’s specific objection procedures and legal channels for filing objections.
• Discusses how a company’s company secretary can raise a concern regarding legal procedures

5.40 Corporate and Economic Laws

• Further descriptive questions and their answers are provided.
• A brief overview of the process that needs to be followed in various merging or amalgamation situations.
• A case regarding a group of shareholders voting.

5.41 Corporate and Economic Laws

• Contains more detailed explanations and answers to various questions related to the topic

5.42 Corporate and Economic Laws

• Further discussions and clarifications on scheme approval and the related requirements, majority, and procedure.

5.43 Corporate and Economic Laws

• Elaboration on processes and specifics of scheme approval, dissenting shareholders' rights, and implications resulting from the decision or approvals

5.44 Corporate and Economic Laws

• Case study on the validity of a takeover under particular provisions of the law

Test your knowledge on the key aspects of corporate mergers and acquisitions, including shareholder approval, pricing for minority shareholders, and the role of registered valuers. This quiz will cover crucial rules and provisions related to equity shareholders in mergers.