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CS Professional · Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

Before the board of Vihaan Foods Ltd approves a scheme of arrangement, the promoters ask why a valuation report from an independent professional is obtained. Which is the most accurate reason?

An independent valuation report provides an objective basis for the share swap ratio and demonstrates fairness to all shareholders, particularly minorities. It does not guarantee Tribunal sanction, dispense with shareholder approval, or determine tax liability.

  1. ATo guarantee that the Tribunal will sanction the scheme
  2. BTo give an objective basis for the swap ratio and show fairness to all shareholders, including minorityCorrect
  3. CTo avoid the need for shareholder approval
  4. DTo fix the company's tax liability finally

Explanation

An independent valuation report supports the fairness of the exchange ratio and helps protect minority interests and decision making. It does not guarantee sanction, replace shareholder approval, or settle tax liability.

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