01
Scheme Design
The structure of the merger, demerger or arrangement, the appointed date, the consideration and the treatment of every class affected, drafted to be both commercial and sanctionable.
Mergers, demergers and arrangements are court approved restructurings. The scheme is drafted, the valuation is justified, the creditors and shareholders are heard, and the Tribunal sanctions what it finds fair. We carry the whole process and write the scheme so it survives that scrutiny.
A scheme is a single document that has to satisfy the board, the valuer, the creditors, the shareholders, the regulators and the Tribunal. Each audience reads it for a different reason. We draft it for all of them.
The structure of the merger, demerger or arrangement, the appointed date, the consideration and the treatment of every class affected, drafted to be both commercial and sanctionable.
Coordination of the registered valuer and the fairness opinion, and the framing of a share exchange ratio that the affected shareholders and the Tribunal will accept as fair.
The applications to convene meetings, the meetings of creditors and shareholders, the petition for sanction and the conduct of the hearing before the Tribunal.
Notices to the regulators and the responses to any observation or objection from the authorities, the creditors or the shareholders during the process.
Structuring for tax neutrality where the conditions for an amalgamation or demerger are met, and the stamp duty position on the transfer the scheme effects.
Filing the order, giving the scheme effect from the appointed date, and the integration steps that follow once the restructuring is complete.
A scheme moves through a defined sequence that the statute prescribes. Each stage produces a record the Tribunal will read before it decides whether the scheme is fair.
Settle the structure and the appointed date, and obtain the valuation and fairness opinion that support the ratio.
Approve the scheme at board level and file the first application with the Tribunal.
Convene and hold the meetings of creditors and shareholders, or obtain dispensation where permitted.
Petition for sanction, address regulator observations and present the scheme at the hearing.
File the sanction order, give the scheme effect from the appointed date and complete integration.
A scheme is not approved because it suits the company. It is approved because the court is satisfied that it is fair to everyone bound by it, that the disclosure was complete and that the process was honest. We build that fairness into the scheme and the record from the first draft, because it cannot be supplied at the hearing.
Short, direct, on the record.
A scheme of arrangement is a court approved restructuring under Sections 230 to 232 of the Companies Act, 2013. It is the mechanism for mergers, demergers, amalgamations, capital reductions and other arrangements between a company and its shareholders or creditors. The company proposes the scheme, the affected classes vote on it at meetings convened for the purpose, and the Tribunal sanctions it if it is satisfied that the scheme is fair and the process was proper. Once sanctioned and filed, the scheme binds everyone within its scope.
In a merger or demerger that involves an exchange of shares, a registered valuer determines the relative values of the companies and recommends a ratio, usually supported by a fairness opinion from a merchant banker. The ratio is the single most scrutinised number in the scheme, because it decides how value is shared between two sets of shareholders. We coordinate the valuation and frame the ratio so that it is defensible to the affected shareholders and to the Tribunal, and resistant to challenge by an objector.
Section 233 of the Companies Act provides a simpler route for certain mergers, principally between two or more small companies and between a holding company and its wholly owned subsidiary. Instead of the full Tribunal process, the merger is approved by the central government through the regional director, after the members and creditors have approved it and the regulators have had an opportunity to object. It is faster and lighter than a full scheme, and it suits group reorganisations that qualify.
The Income Tax Act treats an amalgamation as tax neutral where it meets the conditions in Section 2(1B), and a demerger as tax neutral where it meets the conditions in Section 2(19AA), which include the transfer of the undertaking on a going concern basis and the issue of shares to the right shareholders. Tax neutrality is not automatic. It depends on drafting the scheme so that every statutory condition is satisfied. We structure the scheme to meet the conditions rather than to hope they are met.
A scheme runs on a statutory timetable that includes the first application, the meetings of creditors and shareholders or their dispensation, the notice to regulators, the petition for sanction and the hearing. The total time depends on the complexity of the scheme, the number of companies involved and the load on the Tribunal, but it is measured in months rather than weeks. Careful preparation of the scheme and the valuation shortens the process by reducing the queries and objections that lengthen it.
AIF formation across Category I, II and III under SEBI
Ring fenced vehicles for acquisitions, infrastructure and finance
Equity and contractual joint ventures with governance built to last
The cleanest outcomes are built into the structure at the start, not negotiated out of disputes later.