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CS Professional · Corporate Restructuring, Valuation and Insolvency · Documentation - Merger and Amalgamation

Sunrise Textiles Ltd and Kaveri Fabrics Pvt Ltd plan an amalgamation under a scheme. Before the application is made to the Tribunal, the scheme's draft terms are first placed for consideration by whom within each company?

The Board of Directors of each company first considers and approves the draft scheme, normally with a valuation report and fairness opinion before it. Only afterwards is the scheme filed with the Tribunal, and creditors, regulators and shareholders are brought in at later stages.

  1. AThe Board of Directors of each company, which approves the draft schemeCorrect
  2. BOnly the Registrar of Companies, who vets the draft scheme
  3. CThe Regional Director, who must pre-approve every draft
  4. DThe secured creditors alone, by written consent

Explanation

In practice the first step in documentation is a board meeting of each company that considers and approves the draft scheme, usually after reviewing the valuation report and fairness opinion. Regulators and creditors come in later, once the scheme is filed with the Tribunal. The ROC and Regional Director do not pre-approve drafts.

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