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CMA Final · Corporate and Economic Laws · Compromises, Arrangements and Amalgamations

A scheme of merger between an Indian company and a foreign company is being drawn up under Section 234 of the Companies Act, 2013. Which form of consideration to the shareholders of the merging company is expressly permitted by the section?

Section 234(2) allows the merger scheme to provide consideration to the shareholders of the merging company in cash, in Depository Receipts, or partly in cash and partly in Depository Receipts, as the scheme drawn up for the purpose provides.

  1. ACash, Depository Receipts, or partly cash and partly Depository ReceiptsCorrect
  2. BOnly Depository Receipts
  3. COnly cash payment in Indian rupees
  4. DOnly equity shares of the surviving company

Explanation

Section 234(2) says the terms of the scheme may provide for payment of consideration in cash, or in Depository Receipts, or partly in cash and partly in Depository Receipts. Limiting it to only cash or only Depository Receipts ignores the combination expressly allowed.

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