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  • STUDY MATERIAL

    PROFESSIONAL PROGRAMME

    CORPORATE RESTRUCTURING,CORPORATE RESTRUCTURING,CORPORATE RESTRUCTURING,CORPORATE RESTRUCTURING,

    VALUATIONS AND INSOLVENCYVALUATIONS AND INSOLVENCYVALUATIONS AND INSOLVENCYVALUATIONS AND INSOLVENCY

    MODULE 1

    PAPER 3

    ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003

    tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727

    email info@icsi.edu website www.icsi.edu

  • © THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

    TIMING OF HEADQUARTERS

    Monday to Friday

    Office Timings – 9.00 A.M. to 5.30 P.M.

    Public Dealing Timings

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    With financial transactions – 9.30 A.M. to 4.00 P.M.

    Phones

    4150444,45341000

    Fax

    011-24626727

    Website

    www.icsi.edu

    E-mail

    info@icsi.edu

    Laser Typesetting by Delhi Computer Services, Dwarka, New Delhi Printed at Tan Prints/PRN-2441/2000/July, 2014

  • (iii)

    PROFESSIONAL PROGRAMME

    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.

    The purpose of this study material is to provide an in-depth understanding of all aspects and

    intricacies of law and practical issues affecting and arising out of Corporate Restructuring, Valuation

    as well as Insolvency, aims at through each phase of preparation, stressing upon and dealing,

    exhaustively with key concepts, legislative aspects and procedures, duly annotated with judicial

    references.

    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 material may, therefore, be

    regarded as the basic material and must be read 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 Institute’s journal

    ‘Chartered Secretary’ and bulletin ‘Student Company Secretary’ as well as other law/professional

    journals like Company Law Journal, Corporate Law Advisor, SEBI and Corporate Laws, Company

    Cases etc.

    This Study Material is based on the Companies Act, 1956 except for the provisions relating to Buy Back of Shares which are notified upto June 30, 2014 under Companies Act, 2013. However, it may so happen that some developments might have taken place during the printing of the study material and its supply to the students.

    The students are therefore, advised to refer to the Student Company Secretary and other

    publications for updation of the study material.

    In the event of any doubt, students may write to the Directorate of Academic in the Institute for

    clarification at academics@icsi.edu.

    Although care has been taken in publishing this study material, yet the possibility of errors,

    omissions and/or discrepancies cannot be ruled out. This publication is released with an

    understanding that the Institute shall not be responsible for any errors, omissions and/or discrepancies

    or any action taken in that behalf.

    Should there be any discrepancy, error or omission noted in the study material, the Institute shall

    be obliged if the same are brought to its notice for issue of corrigendum in the Student Company

    Secretary.

  • (iv)

    PROFESSIONAL PROGRAMME

    SYLLABUS

    FOR

    MODULE I - PAPER 3: CORPORATE RESTRUCTURING, VALUATION AND

    INSOLVENCY

    Level of Knowledge: Advance Knowledge

    Objective: To acquire knowledge of the legal, procedural and practical aspects of Corporate

    Restructuring, Valuation and Insolvency.

    Detailed Contents:

    PART A - Corporate Restructuring (50 Marks)

    1. Introduction and Concepts

    • Meaning of Corporate Restructuring

    • Need, Scope and Modes of Restructuring

    • Historical Background

    • Emerging Trends

    • Planning, Formulation and Execution of Various Corporate Restructuring Strategies - Mergers,

    Acquisitions, Takeovers, Disinvestments and Strategic Alliances, Demerger and Hiving off

    • Expanding Role of Professionals

    2. Merger and Amalgamation

    • Introduction

    • Legal, Procedural, Economic, Accounting, Taxation and Financial Aspects of Mergers and

    Amalgamations including Stamp Duty and Allied Matters

    • Interest of Small Investors

    • Merger Aspects under Competition Law

    • Jurisdiction of Courts; Filing of Various Forms

    • Amalgamation of Banking Companies and Government Companies

    • Cross Border Acquisition and Merger

    3. Corporate Demerger and Reverse Merger

    • Concept of Demerger; Modes of Demerger - by Agreement, under Scheme of Arrangement

    • Demerger and Voluntary Winding Up

    • Legal and Procedural Aspects; Tax Aspects and Reliefs

    • Reverse Mergers – Procedural Aspects and Tax Implications

    4. Takeover

    • Meaning and Concept

    • Types of Takeovers; Legal Aspects – SEBI Takeover Regulations

  • (v)

    • Disclosure and Open Offer Requirements

    • Bail Out Takeovers and Takeover of Sick Units

    • Takeover Defences

    • Cross Border Takeovers

    5. Funding of Merger and Takeover

    • Financial Alternatives; Merits and Demerits

    • 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

    • Rehabilitation Finance

    • Management Buyouts/Leveraged Buyouts

    6. Financial Restructuring

    • Reduction of Capital

    • Reorganization of Share Capital

    • Buy-Back of Shares – Concept and Necessity

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

    7. Post Merger Reorganization

    • Factors involved in Post Merger Reorganization

    • Integration of Businesses and Operations

    • Assessing Accomplishment of Post Merger Objectives; Measuring Post Merger Efficiency

    8. Case Studies

    PART B – Valuation (30 Marks)

    9. Introduction

    • Meaning, Objective & Scope of Valuation

    • Principles of Valuation

    • Preliminary Work relating to Valuation

    • Valuation Standards and Valuation Analysis

    10. Valuation Techniques

    • Historical Earnings Valuation

    • Asset Based Valuation

    • Market Based Valuation

    11. Regulatory and Taxation Aspects

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

    • Income Tax Implications

    12. Valuations for Different Strategies

    • Merger & Acquisition, Demerger, Slump Sale

    • Liquidation and Corporate Insolvency

  • (vi)

    • Internal & External Restructuring

    • Valuation of Intangibles

    • Valuation of Securities

    PART C – Insolvency (20 Marks)

    13. Introduction

    • Concept of Insolvency, Historical Developments

    • History of Bankruptcy Laws in USA, UK and India

    14. Revival, Rehabilitation and Restructuring of Sick Companies

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

    Sick Companies

    15. Securitization and Debt Recovery

    • Overview of the Securitization and Reconstruction of Financial Assets and Enforcement of

    Security Interest Act, 2002; Process; Participants

    • Special Purpose Vehicle (SPV), Asset Reconstruction Companies (ARCs), Qualified Institutional

    Buyers (QIB)

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

    • Tribunal, Procedu

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