Skip to content

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

Hindustan Agro Ltd, an Indian company, is merging with Greenfield Inc., incorporated in a notified jurisdiction. The scheme proposes to pay Greenfield's shareholders partly in cash and partly in Depository Receipts. Under the Companies Act, 2013, this payment structure is:

The structure is permitted. Section 234(2) allows the scheme to pay shareholders of the merging company in cash, in Depository Receipts, or partly in cash and partly in Depository Receipts, as the scheme provides, subject to RBI prior approval.

  1. ANot permitted, as consideration must be wholly in equity shares
  2. BPermitted only if paid wholly in cash
  3. CPermitted, since consideration may be in cash, Depository Receipts, or partly in eachCorrect
  4. DPermitted only if the Tribunal converts the Depository Receipts into equity shares

Explanation

Section 234(2) provides that the scheme may provide for payment to shareholders of the merging company in cash, in Depository Receipts, or partly in cash and partly in Depository Receipts. A mixed payment is therefore expressly allowed.

Did you get it right without looking?

One question tells you little. A timed set on Compromises, Arrangements and Amalgamations shows your real accuracy, how long you take and where you lose marks.

Practise Compromises, Arrangements and AmalgamationsFree diagnostic mock

More Compromises, Arrangements and Amalgamations questions