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

The board of Meru Textiles Ltd meets to approve a draft scheme of amalgamation with Tapi Fabrics Ltd. Which approach to the board resolution is most appropriate for documentation purposes?

The board should approve the draft scheme at a duly held meeting, considering the valuation report and share exchange ratio, and authorise specified persons to file applications and sign documents. The scheme originates from the board; Tribunal sanction and shareholder approval come afterwards, not instead.

  1. APass the resolution by circulation, since schemes are routine matters
  2. BPass it at a board meeting, approving the draft scheme, the valuation report and share exchange ratio, and authorising named persons to file applications and sign documentsCorrect
  3. CSkip the board resolution because the Tribunal will approve the scheme
  4. DObtain only shareholder approval since the board has no role in a scheme

Explanation

The scheme originates with the board, which should approve it at a meeting after considering the valuation report and exchange ratio and authorise officers to make the filings. Circulation is unsuitable for such a major matter, and bypassing the board is incorrect because the Tribunal sanction follows, not replaces, company approval.

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