corporate restructuring

Transcription

CORPORATE RESTRUCTURING
A PRESENTATION BY MR. S. H. BATHIYA
S. H. Bathiya & Associates - www.shbathiya.com
1
What is Restructuring?
Term “Restructuring” is not defined in
Companies Act or Income tax Act.
To alter the make up or pattern of.
To alter the structure of something.
There should be an existing structure
before one can restructure.
The existing structure may have many
constraints-Financial, Legal, Business
and Management constraints which
must be kept in mind while restructuring.
S. H. Bathiya & Associates www.shbathiya.com
2
Bharti-MTN deal structure failed mainly due to legal
constraints as dual listing is not permitted in India
and South African Government -the 21% Shareholder
of MTN- did not approve the deal in the structure
presented.
The deal’s contours involved a complex structure in
which both companies would pay cash and equity
for stakes in each other, the end result of which
would have given Bharti Airtel a 49% stake in MTN
and MTN and its shareholders would have
obtained a 36% economic interest in Bharti. In the
next leg, both companies would have considered a
full-fledged merger.
Dual listing would require a multi currency
settlement structure and would lose SEBI’s control
over other country trading. It would also have
required many changes in curent Indian FDI policy.
3
Corporate Restructuring
Corporate Restructuring is a Process of
redesigning one or more aspects of a corporate
for achieving certain objectives.
There may be a single objective for Corporate
Restructuring but most of the times there are
multiple objectives of Corporate Restructuring .
In all probability, there may be a dominant
objective along with one or more other
important objectives.
Stated and unstated objectives.
Grasim’s proposed merger of Cement
Businesses achieves many other important
objectives like strengthening Promoter Group’s
control over cement business, improving future
cash flow position, etc.
4
GRASIM - PRE RESUTRCTURING
TEXTILES. etc
GRASIM
INDUSTRIES
LIMITED
CEMENT
100%
SAMRUDDHI
55%
ULTRATRECH
1.
GRASIM - POST RESUTRCTURING
GRASIM INDUSTRIES LIMITED
TEXTILES, etc
AROUND 65%
SAMRUDDHI
ULTRATECH
CEMENT
SAMRUDDHI CEMENT
6
7
8
PROCESS OF CORPORATE
RESTRUCTURING
1. Understand the objectives
2. Prepare viable options
9
3. Select the right option by
optimising
4. Execute the selected option.
10
Understanding the Objectives of
Corporate Restructuring.
Positioning the business to be more competitive
1.
◦
◦
◦
◦
◦
◦
◦
2.
3.
By achieving Economies of Scale.
By acquiring focus.
By acquiring competition.
By increasing efficiency
By reducing expenses
By acquiring larger market share or capacities
By unlocking values
Surviving in an adverse economic climate.
Taking the business in an entirely new direction.
11
4.
Restructuring of Debt .
◦ Corporate Debt Resrtuctuting Scheme of RBI – Wockhardt
Limited. Essar Limited. Arvind Limited.
5.
Rehabilitation of Business
◦ Restructuring through BIFR-Zenith Limited, MJ Pharma,
SM Dyechem Limited, Gujrat Lyka, Pradeep Drug Company.
◦ Buying or selling of stressed assets. ARCIL-Jaghadia Copper
Limited, Global Boards Limited, Phlox Pharma Limited.
6.
7.
8.
9.
Inviting new partners or Private Equity.
Settling Family Disputes or Family Arrangements –
Reliance Group
Succession planning.
Division of Assets among Promoters-Asian Hotels
Limited-Trifurcation.
12
RELIANCE DEMERGER
PROMOTERS
PUBLIC
PROMOTERS
PUBLIC
PROMO
TERS/RIL
PUBLIC
T
T
E
ENERGY
F
CAPITAL
E
RIL
F
G
G
13
Scheme was not explicit about division
between two brothers.
Concept of “Undertaking”.
Inter se transfer of shares between two
brothers/families ?
Takeover Code exemption.
14
10.
11.
Acquiring new Business or new Markets.
Obtaining Listing.
◦
By Reverse Merger-Jaipan Domestic, Tricom
Agrochem Limited.
By Normal merger.
By Demerger.
◦
◦
12.
◦
◦
13.
14.
15.
Getting shares Delisted.
Through Delisting Regulations.
Through Buy back not possible.
Improving the Balance Sheet , Profit and Loss
Account or Cash flows.
Consolidation of accounts.
Saving on taxes. Section 72 A,
15
Tax considerations
Income-tax
Dividend Distribution tax
◦ Waiver of dividend
◦ LLP
Deemed Dividend tax
Surcharge
Wealth-tax
Service tax
Minimum Alternate Tax
Carry forward of losses and depreciation.
Marshal Sons Judgment-Supreme Court
Supreme Court in the case of McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148, Even if the transaction is genuine and even if it is actually acted upon, but if the
transaction is entered into with the intention of tax avoidance, then the transaction
would constitute a colourable device.
That the courts are now concerned, not merely with the genuineness of a transaction,
but with the intended effect of the transaction on the fiscal purpose. That, the true
principle in the case of W.T. Ramsay [1981] 2 WLR 449 (HL) was that one must
consider fiscal consequences of a pre−planned series of transactions and one has not
to dissect the scheme and consider individual stages separately.
16
MAT
Investment in
subsidiary
100%
Subsi
diary
Real estate
Transfer at
book values
17
Creation/reduction of Reserves/Goodwill
16.
◦ Capital Reserve
◦ Extract from DQ Entertainment prospectus:
◦ March 8, 2010 : “In respect of the Scheme of Amalgamation
of the erstwhile DQ Entertainment Limited (“Transferor
Company”) with our Company (“Transferee Company”),
the accounting was not in strict compliance with AS 14. In
case the accounting were in compliance with the “purchase
method” specified in AS 14, amounts aggregating to Rs.
103.17 million would have been credited to Capital Reserve
Account.
◦ General Reserve
◦ Revaluation Reserve
◦ Amalgamation Reserve
◦ Goodwill
17.
18.
19.
Providing Free movement of Cash Flows.
Increasing Promoters’ shareholding/control.
Increasing market capitalisation/improving perception
18
20. Write off Debtors, Debit Balance in P & L
Account, Goodwill, Obsolete Stock
Onward Technologies Limited
Zenith Limited
19
ONWARD GROUP
PRE RESTRUCTURING
HOLDING COMPANY
ONWARD TECHNOLOGIES LIMITED
(OTL)-Listed Company
SHARE PREMIUM
:
ASSETS
INVESTMENT IN OEL :
LOAN TO OEL
TOTAL
:
Rs. 36.66 Cr.
Rs. 20.00 Cr.
Rs. 10.69 Cr.
RS. 30.69 Cr.
100% SUBSIDIARY COMPANY
ONWARD ESERVICES LIMITED (OEL)
DR. BALANCE OF P/L :
Rs. 15.68 Cr.
IRRECOVERABLEDEBTORS:Rs.1.90 Cr.
OBSOLETE INVENTORIES: Rs.1.81Cr.
LOSS IN
VALUE OF SUNDRY
ADVANCES :
Rs. 9.99 Cr.
TOTAL
Rs. 29.39 Cr.
LIABILITIES
SHARE CAPITAL :
Rs. 20.00 Cr.
LOAN FROM OTL :
TOTAL
Rs.10.69 Cr.
Rs. 30.69 Cr.
20
ONWARD GROUP
POST RESTRUCTURING
HOLDING COMPANY
ONWARD TECHNOLOGIES LIMITED
(OTL)
SHARE PREMIUM
:
INVESTMENT in OEL
LOAN TO OEL
:
Rs. 7.26 Cr.
: Rs.1.29 Cr.
Rs. 0 Cr.
100% SUBSIDIARY COMPANY
ONWARD ESERVICES LIMITED (OEL)
DR BALANCE OF P/L : Rs.0
IRRECOVERABLE
DEBTORS:
Rs.0
OBSOLETE INVENTORIES:
Rs.0
LOSS IN
VALUE OF SUNDRY
ADVANCES :
Rs. 0
SHARE CAPITAL :
LOAN FROM OTL :
Rs. 1.29 Cr.
Rs. 0
21
Some issues for Onward
Whether section 269 SS of IT Act will apply
if a loan is repaid otherwise than by way of
an account payee cheque ?
Whether the write off has to be/ should be
routed through Profit and Loss Account in
subsidiary’s books or in holding company’s
books ?
What is the position of true and fair ?
Whether write off of debit balance in P and
L account would jeopardize carried forward
losses?
22
21. Write off of Deferred Revenue
Expenditure against Share Premium
Section 100 of Companies Act.
Telco Limited. A write-off of deferred revenue
expenditure of Rs. 933 crores, a write-down of
fixed assets of Rs. 215 crores and write-off for
diminution in value of investments of Rs. 32
crores. This aggregate amount of Rs. 1,180 crores
was written off against Telco's share premium
account thereby reducing its reserves (and
therefore its net worth).
Mahindra and Mahindra Limited.
Section 80 of Companies Act. Reduction of
Capital Redemption reserve.
23
22.Write off of Intangibles
Alembic Limited.
Marico Limited.
Avoiding future write-offs against future profits.
Improving Earnings per share and profitability
ratios.
MAT benefit-Auditors’ Qualification-Apollo Tyres
Limited 255 ITR 273 (SC).
The Assessing Officer does not have the
jurisdiction to go behind the net profit shown in
the profit and loss account except to the extent
provided in the Explanation to section 115J.
24
23. Reduction of Share Premium or
Capital Reserve.
Section 80 of Companies Act
Creditors’ consent ?
25
24. Liquidation/Dissolution without
winding up.
Section 46 of IT Act
Dividend to the extent of distribution of
accumulated profits
Balance amount in excess of cost of
acquisition of shares to be treated as
capital gains.
26
25.
STEP UP UP
ACQUIRER COMPANY
AQUIAQUIRE SHARES
WORTH RS. 200 CRORES
SHARES WORTH RS. 200
CRORES
SHAREHOLDERS
SHAREHOLDERS
LAND – Rs.
1CRORE
27
Liquidation of step down subsidiary.
Attachment of rights in step down
subsidiary. Shree Nirmal Commercial
Limited vs. CIT (193 ITR 694) Bombay High
Court –
Hanuman Vitamin Foods Limited. The
Supreme Court held that transfer of shares
in a cooperative society is subject to levy of
stamp duty under the Bombay Stamp Act,
1958. (AIR 2000 SC 2571)
Reverse merger with step-down subsidiary.
Actual Cost –Section 43(1) of IT Act.
Written Down Value-Section 43(6) of IT Act.
28
26. Capital Reorganisation
Squeezing out.
Subdivision of shares.
Change in kind of share capital.
Variation of rights.
Change in terms of issue of shares.
29
27. Issue of Preference bonus
Shares/Bonus Debentures
Hindustan Lever Limited
Sun Pharmaceuticals Industries Limited.
Deemed Dividend provisions. Section
2(22) of IT Act.
Taxation in the hands of shareholders. In
case of redemption-in case of Buybackin
case of sale.
Taxation in the hands of Company
30
28. Stamp Duty Considerations
Transferee
Listed Company
Transferor
Listed Company
100% subsidiary
invests in Demerged
entity
Transfers Undertaking
at Book values to
100% SubsidiaryPurchase consideration
remains a liability
Pays off the purchase
consideration liability
Either through Asset
Sales or through Slump
Sale or Slump sale
through Court Process
31
Cross holdings reduce stamp duty.
First convert into 100% subsidiary and then merge.
Article 25(da) of Bombay Stamp Act.10% of value of shares
issued but not exceeding
◦ 5% of value of immovable property situated in Maharashtra
◦ .7% of value of shares issued plus consideration paid
whichever is higher.
Remission of stamp duty would be available in the case of transfers
envisaged under notification dated January 16, 1937, i.e., cases
where at least 90 per cent. of the issued capital of the transferee
company is in the beneficial ownership of the transferor company,
where the transfer takes place between a parent company and a
subsidiary, one of which is the beneficial owner of not less than 90
per cent. of the issued share capital of the other, or between two
subsidiaries in each of which not less than 90 per cent. of the share
capital is in the beneficial ownership of a common parent
company.(Gemini Silk Limited-Calcutta High Court –August 8, 2002)
32
29. Reduction of Entities
Strike off of name from the Register of
Companies.
Dissolution without winding up.
Mergers or absorptions.
33
30. Shifting to more favorable
location--Tax free Zones
location
What happens to benefits available to an
Undertaking ?
Amalgamation or demerger of an
Infrastructure Undertaking of Section 80
(IA) of IT Act.-Section 80 IA (12A).
Whether Section 80 IA (12A) will apply
to 80 IB Undertakings or 80 IC
Undertakings ?
34
CORPORATE RESTRUCTURING WITHOUT
EXTERNAL HELP/APPROVALS .
CORPORATE RESTRUCTURING WITH
COURT / AUTHORITIES HELP
35
TOOLS /OPTIONS OF CORPORATE
RESTRUCTURING
36
Compromises, Arrangements and
Reconstructions –Chapter V of
Companies Act.
Section 391 to 394 of
Companies Act.
Code by itself.
Approval of Court/NCLT
Report of Liquidator and Reginal Director
Required majority.
Section 395 of Companies Act.
Companies (Court) Rules, 1959.
37
Amalgamations- very popular tool
Defined under Income tax Act.
Condition of Industrial Undertaking Amalgamations are tax neutral in the
hands of transferor company and in the
hands of the shareholders
carry forward and set-off of unabsorbed
losses and depreciation to the transferee
company.
38
Conditions prohibiting reconstruction
or amalgamation of company
Section 376 of Companies Act. Where any provision in the
memorandum or articles of a company, or in any resolution
passed in general meeting by, or by the Board of Directors of
the company, or in an agreement between the company and
any other person, whether made before or after the
commencement of this Act, prohibits the reconstruction
of the company or its amalgamation with any body
corporate or bodies corporate, either absolutely or except
on the condition that the managing director or manager of
the company is appointed or reappointed as managing
director or manager of the reconstructed company or of the
body resulting from amalgamation, as the case may be, shall
become void with effect from the commencement of this
Act, or be void, as the case may be.
39
Reverse Mergers.
Popularly used term
◦ when a profit making company merges with a
loss making company or
◦ when an unlisted company merges with a
listed company or
◦ When a large Company merges with a smaller
company - ICICI Limited’s merger with ICICI
Bank or
◦ When stamp duties or other transaction costs
are high
40
Cross Border MergersMergers
Involve more than one country –
Companies Act partially recognizes it. Section
394- Transferor Company includes any “body
corporate” whether a company within the
meaning of this Act or not.
Section 2(7) of Companies Act –”Body
Corporate”…..includes a company incorporated
outside India………………….
Laws of both/all the countries must be adhered
to.
Dividend planning.
Double Taxation Treaty provisions.
41
Demergers and Hiving Off
Meaning and DifferenceConcept first time defined in Income tax Act Section 2(19AA)
Conditions apply
There must be more than one undertaking.
Undertaking Defined.
Demerged Company (Section 2(19AA)) and Resulting
Company (Section 2(41A) )defined.
Conditions are more than in an amalgamationDemergers are tax neutral in the hands of the transferor
company and in the hands of the shareholders“Industrial Undertaking” not required for carry forward and
setoff of losses. No conditions of continuing the Undertaking.
Taxable Demergers
42
Demerger of Firms.
Firms.
No mention in literature but a working
proposition.
Tax liability on demerger- Capital gains ?
Splitting the firms and converting one of
them into Company and inviting private
equity or IPO.
Demeger of LLPs.
43
Takeover of a Company
SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.
Clause 40 A and 40 B of Listing Agreement.
Hostile takeovers.
Indirect takeovers.
GDRs.
Preference Shares.
Competitive Bids.
Poison Pills– Zandu
International takeovers-HSR Provisions-Treaty Provisions-Thin
Cap RulesFame Adlab
Section 79 to be kept in mind for takeover of an unlisted
company.
44
Corporatisation
Many ways for Conversion of a
partnership firm into a Limited Company
Under Part IX of Companies Act, 1956. No
capital gains tax liability - No stamp duty
Succession of a firm by a Company (as a
result of which there is a Transfer of
Capital asset or intangible asset by a firm
to a company)--Under Section 47(xiii) of
Income Tax Act, 1961-Conditions apply
45
Admission of a Company as a partner and
retirement of other partners from firm.
Section 45 (4) of IT Act appliesDistribution of capital asset on
“dissolution or otherwise”.
46
Succession of Proprietary Concern by a
Limited Company- Section 47(xiv) of
Income Tax Act, 1961. Conditions apply
47
Slump Sale of Undertaking
Section 50 B of IT Act.-Section 2 (42C) defines “Slump Sale”
means transfer of one or more undertaking as a result of sale
for a lump sum consideration without values being assigned
to the individual assets and liabilities in such sales.
Explanation 1 to Section 2 (19AA) of IT Act defines
Undertaking.
Long term gain or short term gain.
Section 293 (1)(a) of Companies Act
Postal Ballot requirement
No VAT on Slump Sale.
Stamp Duty payable as movable even if there are immovable
properties in Undertaking-Anil Purshottamdas Kakad vs.
Supdt. of Stamps Bombay High court
Assignment Deed or Agreement to assign.
48
Pure asset sale or pure liability
transfer.
Section 50 of IT Act
Sale of Assets with Mortgage loans
Sale and Lease back.
49
Variation of Rights.
Rights.
Section 106 of Companies Act. Alteration
of rights of holders of special classes of
shares -where share capital is divided
into different classes of
shares………….special resolution of holders
of the issued shares of that class SEBI diktat for listed companies.
50
Conversion of a Fixed asset into
Stock in trade and vice
vice--a-versa
section 45(3) of IT Act.
Section 2(47) of IT Act-”Transfer”-If the
plans are put for approval of authorities..
Section 281 of Income tax Act does not
apply to stock in trade.
Section 293 of Companies Act does not
apply to stock in trade.
51
Subsidiarisation-Subsidiarisation
Acquisition of 50+% shares.
Acquisition of 100% shares.
Issue of fresh shares.
Buyback of shares.
Through Court process.
Demerger to a wholly owned subsidiary
Slump sale to a subsidiary.
Subsidiary by controlling the composition of Board of
Directors of a Company.
Subsidiary’s shareholding in Holding Company prior to
becoming subsidiary Company-Section 42 of Companies Act.
Transfer to/from 100% Subsidiary. Section 47 of IT Act
52
Transfer to a wholly owned Subsidiary-not
regarded as a transfer under section
47(iv) subject to conditions of 8 years
relationship, etc. under section 47 A of IT
Act.
Transfer to a partly owned subsidiary
53
Desubsidiarisation-Desubsidiarisation
The process of breaking holding
subsidiary relationship.
Desubsidiarisation through IPO/offer for
sale.
By issue of fresh shares by subsidiary to
others.
By sale of shares.
Section 47A of IT Act.
54
Trust Structure
Petroleum Trust.-Rs.3188 cr. sales price of
Reliance Shares ICICI also had a trust structure.
55
IPO/OFFER FOR SALE/FOREIGN
LISTING
56
Differential Voting rights
Section 86 of Companies Act allows DVR in
Equity Shares as per Rules
Founder shares.
Special rights.
Participation in profits.
Appointment of nominee directors
Control.
Sebi directive
DCA Rules
57
ESOPS and Sweat Equity
section 79A of Companies Act allows Sweat
equity. Only directors and employees are
entitled- for know how, IPR or value
additions
Tax aspects
Accounting aspects
58
Subdivision and split of shares.
Section 13 (4) of Companies Act- In the
case of a company having a share
capital—
(a) unless the company is an
unlimited company, the memorandum
shall also state the amount of share
capital with which the company is to be
registered and the division thereof into
shares of a fixed amount;
59
Buyback of shares
Section 77A of Companies Act allows.
Sterlite Industries Limited’s case.
Maxwell Industries Limited’s case.
60
Liquidation of Companies
Twin Star Holding Limited.
Actual cost as a deduction ? Section 43
(1) ?
Section 49 (1)(iii)(c) of IT Act-on any
distribution of assets on the liquidation of
a company-- Cost with reference to
certain modes of acquisition- Cost to the
previous owner is cost to the assessee
61
Pyramids and Triangles
62
Share of profits from a partnership
firm/LLP
Section 10(2A) of IT Act.
Section 115 JB of IT Act
63
FORMATION OF SPECIAL
BOARDS
Family Board-Godrej
Board of Advisors
64
Combination of many methods.
65
NEW POSSIBILITIES with LLP STRUCTURE
66
CONVERSION OF A COMPANY INTO
LLP
LLP is treated as a firm for the purpose of Income
tax Act. Definition of “firm ”, “Partner” and
“partnership” in section 2 (23) of IT Act amended
LLP Act provides for such a conversion
NO MAT is Payable by LLP- section 115JB uses
words “assessee being a company…”
NO Dividend Distribution Tax is Payable by LLP–
section 115 - O uses words “ in respect of total
income of a domestic company…”
No surcharge
No deemed dividend treatment
67
Section 73 Explanation not applicable to
LLP - The Explanation applies to a
company.
Share of Profit from a firm is exempt from
MAT under section 115JB of IT Act, as
income under Section 10.
Stamp Duty liability on conversion ?
68
Conversion from unlisted public company
into limited liability partnership
Section 57 of LLP ActAn unlisted public company may convert
into a limited liability partnership in
accordance with the provisions of this
Chapter and the Fourth Schedule.
There should be no charge on assets.
69
CAPITAL GAIN TAX on conversion
into LLP ?
Finance bill 2010 has introduced Section
47 (xiiib).
Applicable to small companies.
Whether there is a transfer ? Texspin
judgment –Bombay High Court.
14A disallowance?
70
CONVERSION OF a FIRM IN TO A LLP
LLP Act provides for this
Up gradation move
Tax consequences ?
71
DOCUMENTATION- DRAFTING AND EXECUTION.
Scheme of Arrangement
Court Petitions
Court
Applications
Affidavits
MOUs
Share Purchase or Share Subscription Agreement
Shareholder Agreement
Non Compete
Confidentiality Agreements
Non solicit Agreements
Family arrangements
Resolutions of Board and shareholders.
72
LEGAL PROVISIONS AFFECTING
RESTRUCTURING
COMPANIES ACT – SECTION 391 TO 394,
SECTION 100 and many other sections
Unlisted Companies (Issue of Sweat
Equity Shares) Rules, 2003.
Unlisted Public Companies (Preferential
Allotment) Rules, 2003,
Companies (Court) Rules, 1959.
73
Provisions relating to mergers and
amalgamations in Companies Bill, 2009.
Scope of mergers and amalgamations has been
enlarged to include:
1.Compromises or arrangements with creditors
and members including take-over offers and
the scheme of debt restructuring together
with valuation of shares and other properties;
2. Mergers and amalgamation of companies
including merger by absorption or merger by
formation of new company;
3. Cross-border amalgamations;
4. NCLT is the single forum for approvals
74
SEBI Act, Rules and Regulations
Securities Exchange Board of India Act, 1992.
SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations 1997.
SEBI (Issue of Capital and Disclosure Requirements )
Regulations, 2009.
SEBI (Prohibition of Insider Trading) Regulations, 1992.
SEBI (Buy- Back of Securities) Regulations, 1998.
SEBI (Delisting of Securities) Guidelines, 2003.
SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999.
SEBI (Informal Guidance) Scheme, 2003.
SEBI (Issue of Sweat Equity) Regulations, 2002.
SEBI (Prohibition of Fraudulent and Unfair Trade Practices
relating to Securities Market) Regulations, 2003.
75
Securities Contracts (Regulation) Act
and Rules
Securities Contracts (Regulation) Rules
76
Stock exchange Listing Regulations
Provisions of Listing Agreement
Clause 24(f).
Clause 24 (g).
Clause 40A and 40B.
Listing Guidelines.
77
Sick Industrial Companies (Special
Provisions) Act.
SICA overrides most of the legislations.
BIFR has exhaustive powers.
78
Income Tax Act
Section 2(1B) Amalgamation, Section 2
(19A), 2 (19AA),2(42C)
Section 28, 43, 45. 46, 49,
Section 47-Transactions not regarded as
transfer
Section 50
Section 50 B- Slump Sale
Section 50 C
Section 72A
Section 79
79
Indian Stamp Act and State Stamp
Acts
state matter-Each state has different
raates of stamp duty
Union Terrritories
Bombay High Court in Litaka
Pharmaceuticals case-Conveyancedemerger also covered.
Article of Schedule to Bombay Stamp Act
When properties of a transferor Company
are situated in 2 states
80
Sales Tax Laws
State VAT Act
Central Sales tax Act
Automatic Registration not possible.
Maharashtra Vat Act has a unique
provision.
81
Sale of Goods Act
Applies to movables
Transfer of Property Act
Court order is a conveyance.
Consent decree is a conveyance
82
Competition Act, 2002
Applies to large mergers and takeovers
83
Labour laws
84
Rent Act
Automatic transfer of Tenancy not
possible.
THE SECURITISATION AND
RECONSTRUCTION OF
FINANCIAL ASSESTS AND
ENFORCEMENT OF SECURITY
INTEREST ACT, 2002(SARFESI)
85
FEMA/RBI/FDI Regulations
Sector specific restriction
Take over of Gujarat Ambuja Cements by
a foreign entity increase foreign stake in
ING Vysya an insurance Company.
DUE DILIGENCE
86
Accounting Standard 14
Does not apply to demergers
Pooling of interest method and Purchase
method
Changing method as per court order
Disclosures
87
IFRS-Business Combination and IAS
IFRS22 IFRS 3 Business Combination
88
VALUATION
During restructuring-of shares,
businesses, intangibles- various
methods- Supreme Court
Methods of valuation-NAV at Market
Values, Earnings multiple Valuation,
Discounted Cash flow valuation, Stock
market valuation.
Fairness opinion
89
Some issues
Whether authorsied capital will merge or demerge in
case of a merger or demerger ?
Whether the Transferee Company should be in
existence on the Appointed date of Demerger ?
Whether the Company need to wait for Stock
Exchange approval prior to filing petition with the
Court ?
Whether separate Resolution under Section 100 of
Companies Act required when the Scheme is under
Section 391 to 394 ?
Whether licenses will automatically be transferred in
a Scheme of amalgamation ?
Whether employees have right to present before
Court ?
90
91

corporate restructuring

Transcription

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