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

Tapti Foods Ltd's directors adopt a report on a proposed merger with Sabarmati Dairy Ltd. Which matter must that directors' report address under section 232(2)?

The directors' report must explain the effect of the compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholders, laying out the share exchange ratio and specifying any special valuation difficulties, as required by section 232(2)(c). It is not limited to creditors or directors' personal matters.

  1. AThe personal tax position of each director
  2. BThe effect of the compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholdersCorrect
  3. COnly the effect on secured creditors
  4. DThe auditors' fee for the next three years

Explanation

Section 232(2)(c) requires a report adopted by the directors explaining the effect of the compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholders, with the share exchange ratio and any special valuation difficulties. Creditors alone, directors' tax and auditors' fees are not the prescribed content.

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