The document discusses various aspects of corporate restructuring in India such as mergers, amalgamations, demergers, slump sales, and financial restructuring. It provides an overview of the key regulations governing takeovers in India from the Securities and Exchange Board of India. Examples of different corporate restructuring techniques including mergers and demergers are presented along with considerations around valuation, share exchange ratios, stamp duty implications and more. Two case studies demonstrating the use of group restructuring to increase promoter shareholding are also summarized.

1. CORPORATE RESTRUCTURING Presentation by : Mr. Virender Ganda, Vishvas Associates New Delhi

3. SEBI TAKE OVER CODE SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 Comprehensive Regulations governing acquisition of shares and take over of a listed Company. (Enforced w.e.f 20.02.1997)

19. DE-MERGER Section 2(19AA) of the Income-tax Act ‘ Demerger’ transfer, pursuant to a scheme of arrangement under Section 391 to 394 of the Companies Act, 1956 by a demerged company of its one or more undertakings to the resulting company in such a manner that-

22. UNDERTAKING Explanation 1 to Section 2(19AA) of Income Tax Act Undertaking shall include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not consulting a business activity.

24. SLUMP SALE Section 2(42C) of the Income-tax Act Slump Sale means- the transfer of one or more undertakings as a result of the sale for a lump consideration without values being assigned to individual assets and liabilities in such case.

26. STAMP DUTY ON MERGER State of Maharashtra Rate of Stamp Duty 10% of aggregate of market value of shares issued in exchange & amount of consideration paid for amalgamation Maximum limit 7% of market value of immovable property located in Maharashtra “ or” 0.7% of aggregate of mkt. value of shares issued & amt. paid for merger, whichever is higher

27. State of Gujarat If Aggregate amount (Mkt. value or face value of shares, (whichever is higher) + amt. of consideration for merger: (i) > Rs. 100 crores- 2% of aggregate amount (ii ) <100 crores> Rs. 500 crores - Rs. 2 crores + 1% of amt. which exceeds Rs. 100 crores (iii) > Rs. 500 crores - Rs. 6 crores + 0.5% of amt. which exceeds Rs. 500 crores

28. State of Karnataka 10 rupees for every Rs. 1000 or part thereof, on market value of the property of the transferor Company located in Karnataka State of Rajasthan 10% of the market value of the property

29. CASE STUDY Case I Listed Companies:- A Ltd B Ltd Shareholding in Both Companies: Promoters’ – 15.65% Public - 84.35% Object: To enhance the Promoters’ Equity in each Company

31. Incorporation of two new Companies X Ltd. Y Ltd. 50% 50% 50% 50% B Ltd. Y Ltd. A Ltd. X Ltd. X Ltd. merged with A Ltd. (post merger shareholding) 10.39% 22% 22% 45.61% Promoters A Ltd. X Ltd. Y Ltd. Promoters- 54.39% Similarly, Y Ltd. merged with B Ltd. (post merger shareholding) 10.39% 22% 22% 45% P romoters B Ltd X Ltd. Y Ltd. Promoters- 54.39%

32. Case II A Ltd. B Ltd 40% 60% 70% 30% Promoters Public A Ltd. Others (Holding Co.) Incorporation of 2 new Companies X Ltd. Y Ltd. A Ltd. Y Ltd. A Ltd. X Ltd. 50% 50% 50% 50%