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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

MEANING OF CORPORATE RESTRUCTURING


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

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. REVERSE MERGER As a commercial term, it means when a Healthy Company (in terms of size, capital or listing status)is merging in a Weak Company (in terms of size, or unlisted).

SECTION 391-394 of Companies Act, 1956

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.

REDUCTION OF CAPITAL
Extinguishing or Reducing the paid-up capital, 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, 1956 SECTION 100 to 105 of Companies Act, 1956

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 EXCHANGES ROLE


REQUIREMENTS Listing Agreement Compliances Stock Exchange Internal Norms Compliance of Securities laws

Compliance of Companies Act


PERSPECTIVE Observations

Compliance of Other Laws

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

DEMERGER

Reliance Capital Ventures Ltd

Reliance Natural Resources Ltd

TYPES OF DEMERGER
Listed Company demerging into two companies (both could be listed). 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

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

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. Mukesh Ambani were transferred to a wholly owned subsidiary, Reliance Industrial Investments and Holdings Limited (RIIHL) along with a Private Trust (Petroleum Trust).

RIIHL and Petroleum Trust were described as Specified Investors which renounced their rights in the scheme itself.

RIL demerger
As a result of demerger the shareholders of Reliance Industries 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. (REVL) Reliance Communication Venture Ltd. (RCOVL) Reliance Capital 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 8.5.3.1 of the SEBI (DIP) Guidelines.

Benefits achieved..
Particulars Amount (Rs.)
24th March 2006 Value of the shares held by a shareholder as on record date (25th Jan,2006) (A)

Amount (Rs.)
20th December, 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

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