Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Types of Corporate Restructuring

Under a scheme approved for merger of Indian company Sundaram Foods Ltd with Alder Foods PLC, a foreign company, the scheme proposes to pay Sundaram's shareholders partly in cash and partly in Depository Receipts of Alder. Under Section 234, is this permissible?

Yes, it is permissible. Section 234(2) allows the scheme to provide consideration to the merging company's shareholders in cash, in Depository Receipts, or partly in cash and partly in Depository Receipts, as the scheme provides. It does not force a single mode of payment.

  1. ANo, consideration must be wholly in cash
  2. BNo, consideration must be wholly in Depository Receipts
  3. CYes, the scheme may provide for payment in cash, in Depository Receipts, or partly in each, as per the schemeCorrect
  4. DYes, but only if shares of the foreign company are issued directly to the shareholders

Explanation

Section 234(2) states that the terms of the scheme may provide for payment of consideration to shareholders of the merging company in cash, in Depository Receipts, or partly in cash and partly in Depository Receipts. The mixed form proposed here is therefore expressly allowed. Options A and B wrongly restrict the form, and D adds a condition that is not in the text.

Did you get it right without looking?

One question tells you little. A timed set on Types of Corporate Restructuring shows your real accuracy, how long you take and where you lose marks.

Practise Types of Corporate RestructuringFree diagnostic mock

More Types of Corporate Restructuring questions