CORPORATE RESTRUCTURING

Bramhanand Kedia Roll No 10

GOVERNING PROVISION
SECTION 391-394 of Companies Act, 1956
Most liberal sections in the entire

Companies Act, 1956.
By way of SCHEME you can propose & achieve whatever you want

or a response to a crisis or major change in the business such as bankruptcy. Restructuring may also be described as corporate restructuring. . debt restructuring and financial restructuring. or buyout. ownership.MEANING OF CORPORATE RESTRUCTURING • Restructuring is the corporate management term for the act of reorganizing the legal. operational. demerger. or other structures of a company for the purpose of making it more profitable. repositioning. or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure.

MODES OF RESTRUCTURING • • • • • • Merger Demerger Reduction of capital Friendly takeover Joint venture Hostile takeover .

TYPES OF RESTRUCTURING MERGER DEMERGER REDUCTION OF CAPITAL .

RESTRUCTURING Approving Authorities High Court BIFR .

MERGER MERGER “Combining of two or more commercial organizations into one in order to increase efficiency and sometimes to avoid competition”. or unlisted)”. 1956 . it means when a Healthy Company (in terms of size. SECTION 391-394 of Companies Act. REVERSE MERGER “As a commercial term. capital or listing status)is merging in a Weak Company (in terms of size.

DEMERGER “Division of a Company with two or more identifiable business units into two or more separate companies ” SECTION – 2(19AA) of Income Tax Act. 1961. .

1956 . Securities Premium Account or liability of members with respect to their unpaid calls” -AN EFFECTIVE WAY OF INTERNAL RESTRUCTURING SECTION – 100 105 of Companies Act.REDUCTION OF CAPITAL “Extinguishing or Reducing the paid-up capital. 1956 SECTION 100 to –105 of Companies Act.

A FEW VARIETY OF MERGER  Unlisted with Listed  Listed with Unlisted  Merger of Subsidiary with Holding Company  Merger with Group Company  Healthy Company with Weak Company Merger through BIFR .

STOCK EXCHANGE’S ROLE REQUIREMENTS Listing Agreement Compliances Stock Exchange Internal Norms Compliance of Securities laws Compliance of Companies Act PERSPECTIVE Observations .

rules etc. applicable on the Company and Companies Act also” .Compliance of Other Laws “The Stock Exchange(s) alongside considers the compliance of Securities laws. regulations.

DEMERGER Reliance Capital Ventures Ltd Reliance Natural Resources Ltd .

 Listed Company is demerged into two companies and another unlisted entity is merging with the one of the demerged entity.  Distribution of shareholding in a Wholly owned Subsidiary among shareholders .TYPES OF DEMERGER  Listed Company demerging into two companies (both could be listed).

Reliance Industries Limited .A Unique Scheme of ArrangementPRE –ARRANGEMENT SCENARIO Reliance Industries Limited was engaged in various businesses: FACTS (i) Coal based power business. (ii) Gas based power business. (iii) Financial services business. (iv) Tele-Communication business .

 RIIHL and Petroleum Trust were described as “Specified Investors” which renounced their rights in the scheme itself. Mukesh Ambani were transferred to a wholly owned subsidiary. Reliance Industrial Investments and Holdings Limited (RIIHL) along with a Private Trust (Petroleum Trust).RIL… demerger The family arrangement aims at Segregation between the two Ambani Brothers Provision for Specified Investors was made:  Holdings of RIL and other companies in the control of Mr. .

(RCOVL)  Reliance Capital Venture Ltd. other than “Specified Investors” got one share each in the following four resulting companies for each share held in RIL as on the record date:  Reliance Energy Venture Ltd. (RCVL)  Reliance Natural Resources Limited (RNRL) The shares of all these resulting companies got listed on the stock exchanges under the provisions of Cl 8. (REVL)  Reliance Communication Venture Ltd.RIL… demerger As a result of demerger the shareholders of Reliance Industries Ltd.1 of the SEBI (DIP) Guidelines. .3.5.

. 2007 100 shares @928 92800 Shares in RIL Shares in REL Shares in RCOL 100 100 100 (@708) (@38) (@290) 70800 3800 29000 (@2700) 270000 (@1900) (@706) 90000 70600 Shares in RCL Shares in RNRL Total 100 100 (@24) (@23) 2400 2300 108300 (@2376) (@163) 237600 16300 684500 Net benefit 15500 576200 .Benefits achieved…….) 20th December.2006) (A) Amount (Rs.) 24th March 2006 Value of the shares held by a shareholder as on record date (25th Jan. Particulars Amount (Rs.

To sum up…… Restructuring offers tremendous opportunities for companies to grow & add value to the shareholders It unlocks the true potential of the company It is a Strategy for Growth & Expansion It also helps in Cleaning up & create Synergy of Resources .

Thanks a lot… .