CS PROFESSIONAL - CORPORATE RESTRUCTURING, VALUATION AND INSOLVENCY

MODULE1 PAPER 3:

CORPORATE RESTRUCTURING, VALUATION AND INSOLVENCY

Corporate Restructuring is a non-recurring exercise for an organisation but it has a lasting impact on the business and other concerned agencies due to its numerous considerations and immense advantages viz., improved corporate performance, better corporate governance etc. The regulatory provisions and the multitude of judicial and unresolved issues enunciate that the professionals dealing with restructuring should possess unequivocal and explicit knowledge of the objective approach and perspective of the subject.

Company Secretaryship being a professional course, the examination standards are set very high, with emphasis on knowledge of concepts, applications, procedures and case laws, for which sole reliance on the contents of this study material may not be enough. Besides, as per the Company Secretaries Regulations, 1982, students are expected to be conversant with the amendments to the laws made upto six months preceding the date of examination. The study should be done along with the original Bare Acts, Rules, Regulations, Case Law, Student Company Secretary bulletin published and supplied to the students by the Institute as well as recommended readings.

The subject of Corporate Restructuring, Valuation and Insolvency is inherently technical and is subjected to constant refinement through new legislations, rules and regulations made there under, court decisions on specific legal issues and corporate business dynamics. It, therefore, becomes necessary for every student to constantly update himself with the various legislative changes made as well as judicial pronouncements rendered from time to time by referring to the law/professional journals like Company Law Journal, Corporate Law Advisor, SEBI and Corporate Laws, Company Cases etc.

Part A – Corporate Restructuring (50 Marks)

Introduction and Concepts

1. Meaning of Corporate Restructuring

2. Need, Scope and Modes of Restructuring

3. Historical Background

4. Emerging Trends

5. Planning, Formulation and Execution of Various Corporate Restructuring Strategies – Mergers, Acquisitions, Takeovers, Disinvestments and Strategic Alliances, Demerger and Hiving off

6. Expanding Role of Professionals

Merger and Amalgamation

1. Introduction Legal, Procedural, Economic, Accounting, Taxation and Financial Aspects of Mergers and Amalgamations including Stamp Duty and Allied Matters

2. Interest of Small Investors

3. Merger Aspects under Competition Law

4. Jurisdiction of Courts; Filing of Various Forms

5. Amalgamation of Banking Companies and Government Companies

6. Cross Border Acquisition and Merger

Corporate Demerger and Reverse Merger

1. Concept of Demerger; Modes of Demerger – by Agreement, under Scheme of Arrangement

2. Demerger and Voluntary Winding Up

3. Legal and Procedural Aspects; Tax Aspects and Reliefs

4. Reverse Mergers – Procedural Aspects and Tax Implications

Takeover

1. Meaning and Concept

2. Types of Takeovers; Legal Aspects – SEBI Takeover Regulations

3. Disclosure and Open Offer Requirements

4. Bail Out Takeovers and Takeover of Sick Units

5. Takeover Defences

6. Cross Border Takeovers

Funding of Merger and Takeover

1. Financial Alternatives; Merits and Demerits

2. Funding through various Types of Financial Instruments including Equity and Preference Shares, Debentures, Securities with Differential Rights, Swaps, Stock Options; ECBs, Funding through Financial Institutions and Banks

3. Rehabilitation Finance

4. Management Buyouts/Leveraged Buyouts

Financial Restructuring

1. Reduction of Capital

2. Reorganization of Share Capital

3. Buy-Back of Shares – Concept and Necessity

4. Procedure for Buy-Back of Shares by Listed and Unlisted Companies

Post Merger Reorganization

1. Factors involved in Post Merger Reorganization

2. Integration of Businesses and Operations

3. Assessing Accomplishment of Post Merger Objectives; Measuring Post Merger Efficiency

Case Studies

Part B – Valuation (30 Marks)

Introduction

1. Meaning, Objective & Scope of Valuation

2. Principles of Valuation

3. Preliminary Work relating to Valuation

4. Valuation Standards and Valuation Analysis

Valuation Techniques

1. Historical Earnings Valuation

2. Asset Based Valuation

3. Market Based Valuation

Regulatory and Taxation Aspects

1. Legal & Regulatory aspects related to Valuation such as SEBI Regulations/ RBI Regulations

2. Income Tax Implications

Valuations for Different Strategies

1. Merger & Acquisition, Demerger, Slump Sale

2. Liquidation and Corporate Insolvency

3. Internal & External Restructuring

4. Valuation of Intangibles

5. Valuation of Securities

Part C – Insolvency (20 Marks)

Introduction

1. Concept of Insolvency, Historical Developments

2. History of Bankruptcy Laws in USA, UK and India

Revival, Rehabilitation and Restructuring of Sick Companies

1. Sick Companies and their Revival with Special Reference to the Law and Procedure relating to Sick Companies

Securitization and Debt Recovery

1. Overview of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; Process; Participants

2. Special Purpose Vehicle (SPV), Asset Reconstruction Companies (ARCs), Qualified Institutional Buyers (QIB)

3. Overview of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993

4. Tribunal, Procedure; Compromises and Arrangements with Banks and Creditors

Winding Up

1. Concept; Modes of Winding Up; Administrative Machinery for Winding Up

2. Winding up Process and Procedure; Managing Stakeholders and Parties in Liquidation; Conducting Meetings of Shareholders/Creditors; Dealing with Contracts; Managing Estate

3. Outsourcing Responsibilities to Professionals/Service providers such as Valuers, Security Agencies

4. Best Practices in Performing Liquidation/ Administrator Functions; Accountability and Liabilities; Role of Liquidators and Insolvency Practitioners

5. Consequences of Winding Up; Winding Up of Unregistered Companies; Dissolution

Cross Border Insolvency

1. UNCITRAL Model Law on Cross Border Insolvency

2. UNCITRAL Legislative Guide to Insolvency Law

3. World Bank Principles for Effective Insolvency and Creditor Rights

4. Asian Development Bank Principles of Corporate Rescue and Rehabilitation

5. Bankruptcy under Chapter 11 of US Professional Programme