Skip to content

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

Two small companies, Kaveri Foods Ltd and Nila Spices Ltd, are drafting a fast-track merger scheme. The draft says creditors' approval will be taken at a meeting convened on seven days' notice, and that nine-tenths in value of creditors must approve. What is the correct position?

Creditors must approve by a majority representing nine-tenths in value, at a meeting called on twenty-one days' notice with the scheme, or by written approval. A seven-day notice is defective, and the test is value rather than number.

  1. AThe notice period is wrong; creditors must get twenty-one days' notice along with the scheme, or otherwise approve in writingCorrect
  2. BCreditors need not be consulted at all
  3. CSeven days' notice is valid but approval must be by unanimity
  4. DThe notice period is correct and nine-tenths in number is required

Explanation

Section 233(1)(d) requires approval by a majority representing nine-tenths in value of creditors at a meeting convened with twenty-one days' notice along with the scheme, or otherwise approved in writing. Seven days is too short, and the test is value, not number.

Did you get it right without looking?

One question tells you little. A timed set on Documentation - Merger and Amalgamation shows your real accuracy, how long you take and where you lose marks.

Practise Documentation - Merger and AmalgamationFree diagnostic mock

More Documentation - Merger and Amalgamation questions