RESEARCH PROJECT

On
‘Need, Scope and Types of Corporate Restructuring Strategies’
Submitted to

MAHARASHTRA NATIONAL LAW UNIVERSITY, AURANGABAD

Submitted by

HRITHIK CHORMARE

B. A.LL.B. (Hons.) Semester-VIII

Roll No. 2020/BALLB/19

Paper 8.5: Corporate Restructuring and M & A.
Under the guidance of
Ms. Riya Jariwala
Assistant Professor of Economics

Maharashtra National Law University, Aurangabad

April, 2024
 Contents
Acknowledgement......................................................................................................................3

ABSTRACT...............................................................................................................................4

1. INTRODUCTION..............................................................................................................5

2. MEANING OF CORPORATE RESTRUCTURING.......................................................6

3. CORPORATE RESTRUCTURING AS A BUSINESS STRATEGY...............................6

4. HISTORICAL BACKGROUND OF CORPORATE RESTRUCTURING......................7

5. NEED & SCOPE FOR CORPORATE RESTRUCTURING...........................................8

6. BENEFITS OF CORPORATE RESTRUCTURING.......................................................9

7. PLANNING, FORMULATION & EXECUTION OF VARIOUS CORPORATE

RESTRUCTURING STRATEGIES.......................................................................................10

8. TYPES OF CORPORATE RESTRUCTURING............................................................11

9. REGULATORY FRAME OR LEGAL ASPECTS REGARDING CORPORATRE

RESTRUCTURING................................................................................................................12

10. CONCLUSION..................................................................................................................17
 Acknowledgement

First and foremost, I would like to thank our Hon'ble Vice-Chancellor Prof. Dr. K. V. S.
Sarma for providing me an opportunity to do this research project.
I owe a debt of gratitude to my mentors Ms. Riya Jariwala ma’am for his intensive support
and helping me complete the project. They have always been supportive in all my endeavors
and I am grateful for their support.
I humbly thank my friends for their constant support and help whenever I was feeling low. It
is their inspiration that made me complete the project with precision. I would also like to
express my gratitude to my teachers, friends and my relatives for helping me and providing
me support, inspiration and encouragement throughout the study.
 ABSTRACT

Corporate restructuring has no become one of the significant elements which play a very
important role for a company to keep track with the environment. A strategy of corporate
restructuring survives around Mergers, Demergers, Reverse Merger, Disinvestment, Take
Overs, Acquisitions, Strategic Alliance etc., and while doing Corporate Restructuring, a
company must comply with the compliances under several statutes like The Companies Act, ,
Income Tax Act, The Indian Stamp Act, The Competition Act etc., and moreover it also
requires approvals from various authorities like NCLT, SEBI, Ministry of Corporate Affairs.
In this paper the author has tried to explain the concept of corporate restructuring by
explaining its Historical Background, its Business Strategy, Need & Scope, Benefits,
Regulatory Framework or Legal Aspects in detail.

KEYWORDS:-

Corporate Restructuring, Merger, Companies, Competition.

 1. INTRODUCTION

There are basically two ways of expansion or growth of business entities, i.e., organic and
inorganic growth. Organic growth is through the internal strategies, which may relate to
business or financial restructuring within an organization that results in enhanced & better
customer base, higher sales, increased revenue, without resulting in change of corporate
entity. Inorganic growth provides an organization with a method for attaining hasten growth
accrediting to skip few steps on the growth ladder. Restructuring through mergers,
amalgamations, etc., constitute one of the most important techniques for securing inorganic
growth.

A company is growing organically when the growth is through the internal sources without
change in the corporate entity. Organic growth can be done through capital rebuilding or
business restructuring. Inorganic growth is the rate of growth of the business by which there
is an increasing in output and business reach, acquiring new businesses by way of mergers,
acquisitions and take-overs and other corporate rebuilding Strategies which may create a
change in a corporate entity.

The business environment is quickly changing with respect to technology, competition,

products, people, geographical area, markets, customers. It will not be enough if companies
keep pace with these changes but are expected to beat competition and institute in order to
continuously maximize shareholder value. Inorganic growth strategies like mergers,
acquisitions, takeovers and spinoffs are regarded as important mechanism that help
companies to enter new markets, expand customer base, cut competition, integrate and grow
in size quickly, enlist new technology with respect to products, people and processes. Thus,
the inorganic growth strategies are regarded as accelerated corporate restructuring strategies
for growth for a company.
 2. MEANING OF CORPORATE RESTRUCTURING

As per Collins English dictionary, meaning of Corporate Restructuring is the change in

business strategy of an organization resulting in assortment, closing parts of the business, etc,
to increase its long-term profitability.

The “Corporate Restructuring” is an umbrella term that encompasses a broad range of

activities including mergers and expansions, refocusing, and otherwise restructuring asset and
ownership structures. It has been defined as any form of corporate activity which involves a
re-arrangement or change in the asset structure of the organisation with a view to attain long
term strategic objectives.

For most of time Corporate Restructuring happen when a corporate entity is facing some
money related issues. The process of Corporate Restructuring is viewed as critical to kill the
whole money related emergency & to uplift the companies demonstration. Such Changes in
the organizational structure is done, maybe because of the takeover, merger, unsympathetic
financial conditions, some changes in business which was not expected, for ex – buyouts,
insolvency, over utilized work force, etc.

3. CORPORATE RESTRUCTURING AS A BUSINESS

STRATEGY

Corporate restructuring is the process of remarkably changing a company business model,

management team or financial structure to mark challenges and increase shareholders value.
Corporate Restructuring call for major layoffs or bankruptcy, though corporate restructuring
is basically designed to minimize the impact on the employees, if there is any possibility.
Corporate Restructuring may indulge the company's sale or a merger with some another
company. Companies use Corporate Restructuring as a plan of action to ensure their long-
term feasibility. Shareholders or creditors might force a corporate restructuring if they see
company's current business strategies as inefficient to stave off a loss on their investments.
The nature of these threats can differ, but common stimulants for restructuring involve a loss
of market share, reduction of profit margins or decrease in the power of their corporate value.
Thus, Restructuring is an inorganic growth strategy.1
1
Corporate Restructuring, Valuations, & Insolvency, Professional Programme, ICSI, Module - 3
 4. HISTORICAL BACKGROUND OF CORPORATE
RESTRUCTURING

In earlier years, India was a highly regulated economy. Though Government participation
was overwhelming, the economy was controlled in a centralized way by Government
participation and intervention. In other words, economy was closed as economic forces such
as demand and supply were not allowed to have a full-fledged liberty to rule the market.
There was no scope of realignments and everything was controlled. In such a scenario, the
scope and mode of Corporate Restructuring were very limited due to restrictive government
policies and rigid regulatory framework. These restrictions remained in vogue, practically, for
over two decades. These, however, proved incompatible with the economic system in keeping
pace with the global economic developments if the objective of faster economic growth were
to be achieved. The Government had to review its entire policy framework and under the
economic liberalization measures removed the above restrictions by omitting the relevant
sections and provisions.

The real opening up of the economy started with the Industrial Policy, 1991 whereby
'continuity with change' was emphasized and main thrust was on relaxations in industrial
licensing, foreign investments, transfer of foreign technology etc. With the economic
liberalization, globalization and opening up of economies, the Indian corporate sector started
restructuring to meet the opportunities and challenges of competition. The economic and
liberalization reforms, have transformed the business scenario all over the world. The most
significant development has been the integration of national economy with 'market-oriented
globalized economy'. The multilateral trade agenda and the World Trade Organization (WTO)
have been facilitating easy and free flow of technology, capital and expertise across the
globe. A restructuring wave is sweeping the corporate sector the world over, taking within its
fold both big and small entities, comprising old economy businesses, conglomerates and new
economy companies and even the infrastructure and service sector. From banking to oil
exploration and telecommunication to power generation, petrochemicals to aviation,
companies are coming together as never before. Not only these new industries like e-
commerce and biotechnology have been exploding and old industries are being transformed.
With the increasing competition and the economy, heading towards globalisation, the
corporate restructuring activities are expected to occur at a much larger scale than at any time
in the past.
Corporate Restructuring play a major role in enabling enterprises to achieve economies of
scale, global competitiveness, right size, and a host of other benefits including reduction of
cost of operations and administration.2

5. NEED & SCOPE FOR CORPORATE RESTRUCTURING

The Corporate Restructuring process aims at enhancing economies of scale and attainment of
efficiency. The survival and growth of companies in the competitive environment depends on
their ability to pool all their resources for optimum use of maximize the value.
For example, a new big company is created out of merger of small companies that can
achieve economies of scale. Further, the enhanced corporate status allows it to leverage the
same to its own advantage in the form of tapping national or international capital markets for
funds at low cost. This availability of funds at lower rate certainly makes the company more
comfortable and competitive. Therefore, the needs for corporate restructuring exercise are as
follows:
(i) To focus on core strengths.
(ii) To achieve economies of scale by expanding to national and international markets.
(iii) Attainment for operational synergy and efficient allocation of managerial
capabilities and infrastructure.
(iv) Ensuring constant supply of raw materials and access to R&D
(v) Helps in reducing cost of capital
(vi) Helps in revival & the rehabilitation of sick companies by adjusting losses of the
sick units with profits of a healthy unit.
(vii) Improve corporate performance to bring it at par with competitors by adopting the
fast changes brought by information technology.

2
Corporate Restructuring, Liquidation, Insolvency & Winding-Up, Professional Programme, ICSI, Module –
2, Corporate Restructuring, Valuations, & Insolvency, Professional Programme, ICSI, Module – 3, Merger
Acquisition & Corporate Restructuring – Strategies & Practices, Taxmann, 3rd Edition.
The scope of Corporate Restructuring encloses inflate economy and improving efficiency i.e.
profitability When a company wants to grow or survive in a competitive environment, it
needs to restructure itself and focus on its competitive advantage. The survival and growth of
companies in this environment depends on their ability to pool all their resources and put
them to optimum use. A larger company, resulting from merger of smaller ones, can achieve
economies of scale. If the size is bigger, it enjoys a higher corporate status. The status allows
it to leverage the same to its own advantage by being able to raise larger funds at lower costs.
Reducing the cost of capital translates into profits. Availability of funds allows the enterprise
to grow in all levels and thereby become more and more competitive.3

6. BENEFITS OF CORPORATE RESTRUCTURING

Mergers, amalgamations and acquisitions are some forms of inorganic growth strategy. Such
corporate rebuilding strategies have a common goal i.e., to create synergy. Such synergy
effect makes the value of the integrate companies greater than the sum of the two parts.
Primarily, synergy may be in form of increased revenues or i cost savings. Corporate
Restructuring focuses at improving the competitive position of an individual business entities
and maximizing its contribution.

Through Corporate Restructuring Companies hope to benefit form the following ways:-

i. Large size – Company uses mergers and acquisitions to grow in size and become
a controlling force, as collate to its competitors. Primarily, organic growth strategy
takes years to achieve larger size. However, M&A can achieve this within few
months.

ii. Increase in Market Share – Merger eases increase in the market share of the
merged company. Such rise in the market share is achieved on condition
that an additional goods and services are needed by clients. Horizontal merger is
key to increase in market share of a Company. (Ex: - Idea and
Vodafone) iii. Reduced Competition – Horizontal merger helps companies in
reduction of competition. Competition is the prime factor & the most common and strong
grounds for mergers and acquisitions. (Ex: - HP and Compaq)

3
Corporate Restructuring – Types & Importance, Taxmann, 24th September, 2021
 iv. Tax benefits – Companies also use mergers and amalgamations for tax benefits.
Mainly, where there is merger between profit making and lossmaking companies.
Most of the income tax benefit arises from set-off and carry forward provision
under the Income-tax Act, 1961.4

v. Strong brand – Creation of the brand is a long process; hence, companies choose
to obtain an established brand and take advantage of it to earn high profits. (Ex: -
Tata Motors and Jaguar)

vi. New Technology – Companies need to pay attention on technological

developments and their business applications. The Acquisition of smaller
companies helps the enterprises to control distinctive technologies and prosper a
competitive edge over other companies. (Ex: - Dell and EMC)

vii. Domination – Companies get engaged in mergers and acquisitions to become a

superior player or market leader in their particular sector.
However, such supremacy shall be subject to regulations of the Competition Act,
2002. (Ex: - Oracle and I-Flex Technologies) viii. Revival of Sick Company – Today,
the Insolvency and Bankruptcy Code, 2016 has created additional avenue of acquisition
through the Corporate Insolvency Resolution Process.

7. PLANNING, FORMULATION & EXECUTION OF

VARIOUS CORPORATE RESTRUCTURING STRATEGIES

Corporate restructuring strategies depends on the nature of business, type of diversity

required and results in maximization of profit through merging of resources in effective
manner, utilization of the idle resources, effective management of competition etc.,. Planning
the type of restructuring requires detailed business study, expected business demand,
available resources, utilized/idle portion of resources, competitor analysis, environmental
impact etc., The bottom line is that the right restructuring strategy provides optimum synergy
for the organizations involved in the restructuring process. It involves examination of various
aspects before and after the restructuring process.5

4
Section 72, Income Tax Act, 1961
5
PP- CRVI -2014, LESSON – 1 CORPORATE RESTRUCTURING – INTRODUCTION & CONCEPTS.
 8. TYPES OF CORPORATE RESTRUCTURING

There are various types of Corporate Restructuring which includes: -

1. MERGER
Merger is the combination of two or more companies by way of amalgamation or
absorption. It means that two companies get merged to earn high profits.
Merger can be done in many ways: -
i. Horizontal Merger - Two companies that are in direct competition and share the
same product lines and markets i.e., it results in the consolidation of firms that are
direct rivals. E.g., Exxon and Mobil, Ford and Volvo, Volkswagen. ii. Vertical
merger- A customer and company or a supplier and company i.e., merger of firms
that have actual or potential buyer-seller relationship e.g. Ford- Bendix.
iii. Conglomerate merger-Generally a merger between companies which do not
have any common business areas or no common relationship of any kind.
Consolidated firm a may sell related products or share marketing.
iv. Concentric Mergers- Concentric mergers take place between firms that serve
the same customers in a particular industry, but they don’t offer the same
products and services. Their products may be complements, product which go
together, but technically not the same products. For example, if a company
that produces DVDs mergers with a company that produces DVD players, this
would be termed as concentric merger, since DVD players and DVDs are
complements products, which are usually purchased together.

2. DEMERGER
Under this corporate rebuilding procedure, at least two organizations are joined into a
solitary organization to get the advantage of cooperative energy emerging out of such
merger.
3. REVERSE-MEREGER
Reverse merger is the opportunity for the unlisted companies to become public listed
company, without opting for Initial Public offer (IPO). In this process the private
company acquires the majority shares of public company, with its own name.
4. DISINVESTMENT
When a corporate element sells out or exchanges a benefit or auxiliary, it is known as
"divestiture".

5. TAKEOVER/ACQUISTIONS
Under this methodology, the obtaining organization assumes, generally speaking, the
responsibility for the objective organization. It is otherwise called “Acquisition”.

6. JOINT-VENTURE
Under this methodology, a substance is framed by at least two organizations to
embrace budgetary acts together. The resultant substance is known as the ‘Joint
Venture’. Both the gatherings consent to contribute in extent as agreed to shape
another substance and furthermore share the costs, incomes, and control of the
organization.

9. REGULATORY FRAME OR LEGAL ASPECTS

REGARDING CORPORATRE RESTRUCTURING

There are various regulatory or legal provisions regarding corporate restructuring under
various laws: - 1. The Companies Act, 2013
2. Income Tax Act, 1961
3. Competition Act, 2002
4. Stamp Duty

I. COMPANIES ACT, 2013

Chapter XV (Section 230-240) of the Companies Act, 2013 contains provisions on
‘Compromises, Arrangements and Amalgamations’, that covers mergers, amalgamations
and arrangements, Demergers, fast track mergers for small companies, cross border
mergers, takeovers, corporate debt restructuring etc the procedural aspect, such as forms
and notices need to be made are also covered under Chapter XV of the Act.
The following below mentioned is the scheme of Chapter XV.
a. Section 230-231 deals with compromise or arrangements.
b. Section 232 deals with mergers and amalgamations including demergers.
 c. Section 233 deals with amalgamation of small companies (also called fast track
mergers).
d. Section 234 deals with amalgamation of foreign companies (also called as cross
border mergers).
e. Section 235 deals with acquisition and dissenting of shareholders.
f. Section 236 deals with purchase of minority shareholding.
g. Section 237 deals with power of central government to provide for
amalgamation of companies in public interest.
h. Section 238 deals with registration of offer of schemes involving transfer of
shares.
i. Section 239 deals with preservation of books and papers of amalgamated
companies.
j. Section 240 deals with the liability of officers in respect of offences committed
prior to merger, amalgamation etc.

Salient Features of Companies Act, 2013: -

• National Company Law Tribunal to assume jurisdiction of High Court.

• Application for compromise or arrangement to be accompanied by an affidavit
disclosing – 1. All materials facts relating to the company.
2. Reduction of Capital if any included in the Compromise or
arrangement
3. Any scheme of corporate debt restructuring consented to by not less
than
75% of the secured creditors in value along with creditors responsibility
Statement, report of the auditor as to the fund’s requirement after CDR
And the conformity to liquidity test etc6.
• Notice relating to compromise or arrangement and other documents to be placed on
the website of the company7.
• Notice of meeting for approval of the scheme of compromise or arrangement be dent
to various regulators including8
1. The Central Government
2. Income Tax Authorities
3. Reserve Bank of India
4. Security Exchange Board of India
5. The Registrar
6. Respective Stock Exchange, etc.
• Persons holding not less than 10% of the shareholdings or persons having outstanding
debt amounting to not less than 5% of the total outstanding debt as per the latest

6
Section 230(2), Companies Act, 2013
7
Section 230(3), Companies Act, 2013
8
Section 230(5), Companies Act, 2013
 audited financial statement, entitled to subject the scheme of compromise or
arrangement. 9

• No sanction for Compromise or arrangement if accounting treatment is no AS

compliant.10

• Cross border Merger permitted. The 1956 act permits merger of foreign company with
Indian company and not vice versa.11

• Abolishing the practice of companies holding their own shares through a trust
(Treasury Stock) in case of merger of holding and subsidiary companies. Ultimately
the shares are to be cancelled.12

• Fast track mergers introduced. – The new Act enables fast track merger without the
approval of NCLT, between:

1. Two or more small companies.

2. Holding and wholly owned subsidiary companies.
3. Other classes of companies as may be prescribed13

• Approval of scheme by postal ballot thereby involving wider participation.14

II. INCOME TAX ACT, 1961

Income Tax Act deals with the concept of amalgamating/amalgamated companies, carry
forward of losses, exemptions from capital gains tax etc.
A. If capital gains arise on transfer of any capital asset in the scheme of amalgamation,
by an amalgamating company to the amalgamated company to the amalgamated
company, such capital gains shall be exempt from tax provided the amalgamated
company is an Indian company.15
B. If capital gains arising on transfer of shares held in an Indian company by
amalgamating foreign company to amalgamated foreign company, such capital gains
shall be exempt from tax but there is a proviso to this exemption.16

9
Section 230(4), Companies Act, 2013
10
Section 230(7), Companies Act, 2013
11
Section 234, Companies Act, 2013
12
Section 233(10), Companies Act, 2013
13
Section 233, Companies Act, 2013
14
Section 230(6), Companies Act, 2013
15
Corporate Restructuring – A measure to outlast ongoing distress, Income Tax Articles, Taxguru, Aayush
Aggarwal, 2020

16
IBID
 C. Capital gains arising from the transfer of shares in the scheme of amalgamation on the
fulfilment of a few conditions which are given in the act are exempt from tax.17
D. In case the shares received from the amalgamated company are later sold or
transferred, the cost of shares of the amalgamating company shall be the cost of shares
of the amalgamated company and also for determining whether the shares in the
amalgamated are long-term capital assets or not, the period of the holding shall be
computed from the date of acquisition of shares in the amalgamating company.18
E. Depreciation charge on assets is waived and are not strictly observed in case of
amalgamation or demerger of companies where an asset is transferred to an Indian
amalgamated or resulting company under the scheme of amalgamation or demerger.
F. The chargeability under the Income Tax Act to attract capital gains tax liability of
capital assets is not to be applied in a scheme of amalgamation or demerger of
companies on the presupposition that transfer of the asset is not to be constructed as a
transfer.19 In terms of the Act, while computing the profit or loss on the sale of assets
as stock in trade which has become the property of the amalgamated company under a
scheme of amalgamation, the cost of acquisition of such asset to the amalgamated
company shall be the cost of acquisition of such asset to the amalgamating company
plus any increase in cost due to any improvement made thereto and expenditure
incurred wholly and exclusively in connection with such transfer.20

III. COMPETITION ACT, 2002

Today, before conducting certain M&A transaction in India, an approval from the
Competition Commission of India (“CCI”), being the only antitrust authority in India is
required as per the Competition Act, 2002.

An M&A transaction that qualifies as a “Combination” U/S 5 of the Competition Act, is

required to be notified to the CCI unless the transaction is exempted. Such notification to the
CCI has to be filed by the acquirer in case of an acquisition and jointly by the merging or
amalgamating parties in case of a merger or amalgamation.
A transaction shall be qualified as Combination when - control, voting rights, assets or shares
of a company are acquired by a person; acquisition of control of an enterprise where the
acquirer already has direct or indirect control over another entity engaged in identical
business; or, a merger or amalgamation between enterprises.21

The reason for such approval from the CCI is to prevent practices that have an adverse effect
on competition or to hinder abuse of a dominant position in the relevant market:

17
IBID
18
IBID
19
Section 45(1), Income Tax Act, 1961
20
Section 43(c), Income Tax Act,1961
21
Section 5, Competition Act, 2002
 1. Appreciable Adverse Effect - As per Section 3 of the Act, any agreement including
cartel entered in respect of production, supply, distribution, storage, control etc. which
directly or indirectly determines purchases and sale prices; limits or control
production, supply, markets, technical development, investment or provision of
services; directly or indirectly results in bid rigging or collusive bidding are presumed
to have appreciable adverse effect on competition in India. 2223 In the case of Builders
Association of India vs. Cement Manufacturers Association,24 the CCI held that the
presumption of anticompetitive agreements can be inferred from the intention or
conduct of the parties along with circumstantial evidence. In this case although there
was no agreement, circumstantial evidence of parallel changes in the prices and
production of goods indicated that the parties had form a cartel to determine
purchase/sale prices and control production, supply, investment, development etc.

2. Abuse of Dominant Position -As per Section 4 of the Act, dominant position is
defined as a position of strength, enjoyed by an enterprise in the relevant market in
India which enables the enterprise to operate independently of competitive forces in
relevant market or can affect competitors, consumers or relevant market in its own
favour. Imposing unfair or discriminatory condition or price in sale and purchase of
goods and services; limiting or restricting production of goods, services,
technical/scientific development; indulging in practice resulting to denial of market
access; making conclusion of contracts subject to acceptance by other parties; or using
its dominant position in one market to enter into another relevant market results in
abuse of dominant position as per the Act 24. In the case of Shri Shamsher Kataria vs.
Honda Siel Cars India Ltd & Ors,25the CCI held that 14 car companies in India had
abused their dominant position in their respective after markets by requiring
customers to purchase spare parts and diagnostic tools solely from the respective car
manufacturer or its authorized dealers.

3. Transaction which qualifies as Combination cannot legally be consummated until the

CCI grants its approval or the review period of 210 days as provided by the Act has
expired26, whichever is earlier. Before such final verdict, the CCI is required to form a
prima facie opinion on the Combination within a period of 30 working days from the
notification27. The CCI has the power to approve, disapprove or impose modification
to a transaction.28

IV. STAMP DUTY

22
Competition Commission of India – Merger Control, Algo Legal, 4th August, 2020.
23
CompLR983(CCI)
24
CompLR753(CCI)
25
2014 SCC OnLine CCI 95.
26
Section 6(2), Competition Act, 2002
27
Regulation 19(1), Competition Commission of India (Procedure with regard to transaction of Business
relating to combinations) Regulations, 2011.
28
Section 31, Competition Act, 2002
Stamp duty provisions are regulated by “The Indian Stamp Act,1899” which is a Central
enactment and the States are vested with powers either to adopt the said Stamp Act (with
amendments, if any) or enact their own legislations governing payment of stamp duty on
instruments.

Section 3 of the Stamp Act is the main section which provides for levy of stamp duty on
execution of an instrument.

Three important factors for computing stamp duty are: a)

There has to be an instrument
b) Proper execution
c) Rate of stamp duty applicable in the State where instrument is executed.

JUDICIAL PRONOUNCEMENT OVER STAMP DUTY

 Hindustan Lever Vs. State of Maharashtra29

The Supreme Court of India held that a scheme sanctioned by the Court would be an
‘instrument’ and the state legislature has the competence to impose stamp duty on the
order of amalgamation passed by the Court. The Supreme Court further held that. The
foundation or the basis for passing an order of amalgamation is agreement between
two or more companies. Under the Scheme of amalgamation, the whole or any part of
the undertaking, properties or liability of any company concerned in the scheme is to
be transferred to the other company. The scheme of amalgamation has its genesis in
an agreement between the prescribed majority of shareholders and creditors of the
transferor company with the prescribed majority of shareholders and creditors of the
transferee company. The intended transfer is a voluntary act of the contracting
parties. The transfer has all the trappings of a sale. The transfer is affected by an order
of the Court.

10. CONCLUSION

Corporate Restructuring focuses on rebuilding a company & bring a significant change in

structure of the organisation. It indicates towards revival of sick companies which are in loss
for many years & corporate restructurings helps in reviving the companies & earning high
profits. So, to restructure the company we need to know all the rules, regulations, needs &
wants, acts, etc. The Paper reveals all the needs, Scope, types, historical background,
regulatory framework or legal aspects of Corporate Restructuring.

29
2004(9) SCC 438