Who are the parties to a scheme of arrangement?
A scheme of arrangement (or a “scheme of reconstruction”) is a court-approved agreement between a company and its shareholders or creditors (e.g. lenders or debenture holders).
What is a scheme of arrangement in company law?
What is a Scheme of Arrangement? A scheme of arrangement is an agreement, between a company in financial distress and its creditors, to assist the company in fulfilling its debt obligations. A scheme of arrangement works by restructuring the company’s debts and varying creditors’ rights.
Where is under scheme of arrangement?
Where a scheme of arrangement is proposed by the liquidator, NCLT may on an application made by the liquidator order a meeting of the creditors or class of creditors, members or class of members and such meeting shall be conducted in the manner as ordered by the NCLT.
What is scheme of arrangement in stock market?
Scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors.
How do you pass a scheme of arrangement?
A scheme requires approval by at least 75% in value of each class of the members or creditors who vote on the scheme, being also at least a majority in number of each class.
Is scheme of arrangement a court order?
Scheme of Arrangement means a scheme of arrangement, share for share exchange or analogous procedure. Scheme of Arrangement means a scheme of a compromise or arrangement sanctioned by a court under Part VII of the Act, as may be amended or similar procedure under a succeeding law or regulation.
How long does scheme of arrangement take?
As a result, a scheme typically takes about four months to implement from the date of the bidder’s first approach to target, but can be up to six months or longer if significant due diligence is conducted before the scheme is announced or substantial regulatory approvals are required such as FIRB and ACCC.
What is the difference between a scheme of arrangement and a takeover?
Under an off-market takeover bid, no approvals are required from target securityholders or the Court. Rather, target securityholders either accept or reject the bidder’s offer. Under a scheme of arrangement, approvals are required from both target securityholders and the Court.
Who approves a scheme of arrangement?
The existing Law requires that a scheme for merger and/ or any arrangement should be approved by a majority in number representing also 3/4th in value of shareholders/creditors present and voting.
How long does a scheme of arrangement take?
Can a bidder vote in a scheme of arrangement?
If the bid is structured as a scheme of arrangement, any shares in the target which are held by the bidder cannot be voted on when voting to approve the scheme.
Can a scheme of arrangement be hostile?
An off-market takeover bid can be used for either a friendly or hostile deal, whereas a scheme of arrangement and trust scheme can only be used in a friendly deal.
Who can vote in a scheme of arrangement?
For the Scheme to become legally binding, a majority of creditors within each class must vote, with a majority of 75% (by value) in favour being needed within each creditor class, for the Scheme of Arrangement to take effect.