paper 4 corporate restructuring and insolvency€¦ · meaning of corporate restructuring, need,...

Q&A-4.1

Paper 4 Corporate Restructuring And Insolvency

Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.2

Bird's-Eye View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.4

Line Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.8

Frequency Table Showing Distribution of Marks . . . . . . . . . . . . . . . . . . Q&A-4.9

Frequency Table Showing Marks of Compulsory Questions . . . . . . . . . Q&A-4.10

Legends for the Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.11

Study Material Based Contents

1. Study (I) Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.13

2. Study (II) Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.23

3. Study (III) Mergers and Amalgamations . . . . . . . . . . . . . . . . . . . . . Q&A-4.35

4. Study (IV) Takeovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.85

5. Study (V) Funding of Mergers and Takeovers . . . . . . . . . . . . . . . Q&A-4.113

6. Study (VI) Valuation of Shares and Business . . . . . . . . . . . . . . . . Q&A-4.125

7. Study (VII) Corporate Demergers and Reverse Mergers . . . . . . . . Q&A-4.142

8. Study (VIII) Post Merger Re-organisation . . . . . . . . . . . . . . . . . . . . Q&A-4.170

9. Study (IX) Financial Restructuring . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.176

10. Study (X) Revival and Restructuring of Sick Companies . . . . . . Q&A-4.198

11. Study (XI) Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.210

12. Study (XII) Legal Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.215

13. Study (XIII) Securitization and Debt Recovery . . . . . . . . . . . . . . . . Q&A-4.224

14. Study (XIV) Winding-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.245

15. Study (XV) Cross Border Insolvency . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.267

16. Objective Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-4.276

Question Paper of December, 2011 . . . . . . . . . . . . . . Q&A-4.287

Question Paper of June, 2012 . . . . . . . . . . . . . . . . . . . Q&A-4.289

Question Paper of December, 2012 . . . . . . . . . . . . . . Q&A-4.294

Question Paper of June, 2013 . . . . . . . . . . . . . . . . . . . Q&A-4.299

Q&A-4.2

SyllabusPaper 4 (100 marks)

Corporate Restructuring and Insolvency

Level of knowledge : Expert knowledge.

Objectives : To provide an in-depth understanding of all aspects of law and

practical issues relating to corporate restructuring and insolvency.

Part A : Corporate Restructuring (70 marks)

Detailed contents :

1. Introduction

Meaning of corporate restructuring, need, scope and modes of restructuring,

historical background, global scenario, national scenario.

2. Strategies

Planning, formulation and execution of various corporate restructuring

strategies - mergers, acquisitions, takeovers, disinvestments and strategic

alliances, demergers and hiving off.

3. Mergers and Amalgamations

Meaning and concept; 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 procedure related to Government companies; Cross border

mergers.

4. Takeovers

Meaning and concept; types of takeovers; legal aspects - SEBI takeover

regulations; procedural, economic, financial, accounting and taxation aspects;

stamp duty and allied matters; payment of consideration; bail out takeovers and

takeover of sick units; takeover defences; cross border takeovers.

5. Funding of Mergers and Takeovers

Financial alternatives; merits and demerits; funding through various types of

financial instruments including equity and preference shares, options and

securities with differential rights, swaps, stock options; ECBs, funding through

financial institutions and banks; rehabilitation finance; management

buyouts/leveraged buyouts.

6. Valuation of Shares and Business

Introduction; need and purpose; factors influencing valuation; methods of

valuation of shares; corporate and business valuation.

7. Corporate Demergers and Reverse Mergers

Concept of demerger; modes of demerger - by agreement, under scheme of

arrangement; demerger and voluntary winding up; legal and procedural

Q&A-4.3

aspects; tax aspects and reliefs; reverse mergers – procedural aspects and tax

implications.

8. Post Merger Re-organisation

Factors in post merger reorganization: integration of businesses and

operations, financial accounting, taxation, post merger valuation, human and

cultural aspects; assessing accomplishment of post merger objectives;

measuring post merger efficiency.

9. Financial Restructuring

Reduction of capital; reorganisation of share capital Buy-back of shares –

concept and necessity; procedure for buy-back of shares by listed and unlisted

companies.

10. Legal Documentation.

11. Case Studies.

Part B – Corporate Insolvency (30 Marks)

12. Revival, Rehabilitation and Restructuring of Sick Companies

Sick companies and their revival with special reference to the law and

procedure relating to sick companies.

13. Securitisation and Debt Recovery

Securitisation Act :

Overview of the Securitisation 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).

Debt Recovery Act :

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

1993; Tribunal, Procedure; compromises and arrangements with banks and

creditors.

14. Winding up

Concept; modes of winding up; administrative machinery for winding up.

Winding up process and procedure; managing stakeholders and parties in

liquidation; conducting meetings of shareholders/creditors etc.; dealing with

contracts; mana ging estate; outsourcing responsibi l i t ies to

professionals/service providers such as valuers, security agencies, etc; best

practices in performing liquidation/administrator functions; accountability and

liabilities; Role of liquidators and insolvency practitioners. Consequences of

winding up; winding up of unregistered companies; dissolution.

15. Cross Border Insolvency.

Q&A-4.4

Bird's-Eye View

Paper 4

Corporate Restructuring - And Insolvency

Question Paper Based Contents of Last Five Examinations

Years Q. No. Chapter Page

No.No. Name

2011

June

1. (a)

(b)

(c)

2. (a)

(b)

(c)

3. (a)

(b)

4. (a)

(b)(i)

(ii)

(c)

5. (a)

(b)

(c)

(d)(i)

(ii)

(iii)

6. (a)

(b)

7. (a)

(b)

(c)

8. (a)

(b)(i)

(ii)

(iii)

3

16

9

3

3

6

4

4

5

4

4

3

9

9

12

9

9

9

10

13

14

14

13

15

13

14

15

Mergers and Amalgamations

Objective Questions

Financial Restructuring


" " " "

Valuation of Shares Business

Takeovers

" " "

Funding of Mergers and Takeovers

Takeovers

" " "



" " " "

Legal Documentation


" " " "

" " " "

Revival and Restructuring of Sick Companies

Securitization and Debt Recovery

Winding-Up

" " " "


Cross Border Insolvency


Winding-Up


78

280

186

37

55

132

110

99

119

99

99

80

186

186

223

187

187

187

202

239

257

257

233

272

237

246

268

2011

Dec.

1. (a)

(b)

(c)

(d)

2. (a)

7

16

3

2

6

Corporate Demergers and Reverse Mergers

Objective Questions


Strategies


160

281

55

30

140

Q&A-4.5

(b)

(c)

3. (a)

(b)

4. (a)

(b)

(c)

5. (a)

(b)

(c)

6. (a)

(b)(i)

(ii)

7. (a)

(b)

(c)

8. (a)

(b)

(c)

3

3

4

9

6

3

9

3

3

4

14

13

13

13

14

10

15

13

13


" "

Takeovers






" "

Takeovers

Winding-Up


" "

" "

Winding-Up




" "

56

56

111

187

133

57

188

58

58

100

258

225

237

233

258

202

273

239

233

2012

June

1. (a)

(b)

(c)

(d)

2. (a)

(b)

3.

4. (a)

(b)

5. (a)

(b)

(c)

6. (a)

(b)

7. (a)

(b)

(c)

8. (a)

(b)

2

2

3

16

3

5

9

3

5

5

6

7

13

10

14

13

15

14

15

Strategies

" "


Objective Questions






" "





Winding-Up



Winding-Up


31

31

59

283

59

123

196

80

120

120

133

161

236

203

266

234

273

258

273

Q&A-4.6

2012

Dec.

1. (a)

(b)

(c)

(d)

2. (a)

(b)

3.(a) (i)

(ii)

(b)

(c)

4. (a)

(b)

(c)

5. (a)

(b)

(c)

6. (a)

(b)

(c)

7. (a)

(b)

(c)

8. (a)

(b) (i)

(ii)

(c)

3

16

2

2

3

3

6

6

3

7

7

3

12

12

6

12

13

13

14

13

13

13

14

15

13

15


Objective Questions

Strategies

" "


" "


" "



" "


Legal Documentation

" "


Legal Documentation


" "

Winding-Up


" "

" "

Winding-Up




60

284

31

31

81

60

133

133

60

161

161

60

219

219

134

219

234

239

259

234

235

235

260

269

238

273

2013

June

1. (a)

(b)

(c)

(d)

2. (a)

(b)

(c)

3. (a)

(b)

(c)

4. (a)

(b)

5. (a)

(b)

(c)

1

2

4

16

3

3

3

8

3

3

7

6

12

4

4

Introduction

Strategies

Takeovers

Objective Questions


" "

" "

Post Merger Re-organisation


" "



Legal Documentation

Takeovers

Takeovers

21

32

100

285

82

61

83

173

83

83

162

134

221

100

100

Q&A-4.7

6. (a)

(b)

7. (a)

(b)

(c)

8. (a)(i)

(ii)

(iii)

(b)

13

13

14

15

15

15

13

14

13


" "

Winding-Up


" "

" "


Winding-Up


240

236

261

273

273

269

225

246

236

Q&A-4.8

Line Chart Page

Q&A-4.11

Legends for the Graphs

Sh

ort

No

tes

Dis

tin

gu

ish

Be

twe

en

De

sc

rip

tiv

e

Pra

cti

ca

l

Q&A-4.12

FOR NOTES

Question upto Dec. 2008 are from CS Final Gr. II Old Course and from June 2009onwards are from CS Professional Programme New Course.

Q&A-4.13

Star Rating

On the basis of Maximum marks from a chapter Nil

On the basis of Questions included every year from a chapter Nil

On the basis of Compulsory questions from a chapter j

1 Introduction

This Chapter Includes : Meaning of corporate restructuring, Need, Scope and

modes of restructuring, Historical background, Global scenario, National scenario.

Marks of Short Notes, Distinguish Between, Descriptive & Practical Questions

SHORT NOTES

2004 - June [8] (b) Write short notes on the following:

(ii) Disinvestment policy of the government (3 marks)

Answer :

Y The term ‘disinvestment’ refers to the act of transfering public sector undertaking

to private sector.

Q&A-4.14 O Solved Scanner CS Prof. Prog. M-II Paper 4

Y Disinvestment is thus a method for privatisation which is one of the three objectives

(LPG-Liberalisation, Privatisation and Globalisation) covered under the New

Economic Policy (NEP).

Y An advisory body in form of Disinvestment Commission was set up on 23rd August

1996 so as to give advice in relation to disinvestment of public sector undertaking.

Y The process undertaken for disinvestment is as follows :

C Proposals for disinvestment by Disinvestment Commission.

C Proposals reviewed by Cabinet Committee on Disinvestment (CCD)

C Clearance of proposal by CCD & appointment of advisor

C Advertisement & shortlisting of tentative bid

C Consent of Inter Ministerial Group over the share purchase & shareholders

agreement.

C Evaluation by Comptroller & Auditor General (CAG)

2007 - June [8] Write notes on the following:

(i) Restructuring. (4 marks)

Answer :

Restructuring

Y The term ‘restructuring’ means to rebuild or rearrange.

Y Restructuring is a means whereby the organisational structure is changed so that

the organisation accomplishes its objectives.

Y ‘Corporate Restructuring’ is a term of wider importance and covers in its ambit

restructuring or reorganizing or financial restructuring of any organisation done in

order to operate more effectively and efficiently.

DESCRIPTIVE QUESTIONS

2003 - Dec [1] {C} (a) "On-going corporate restructuring is a must for survival due to

globalisation, liberalisation and economic reforms." Discuss. (12 marks)

Answer :

Y “On going corporate restructuring is a must for survival due to globalisation,

liberalisation and economic reforms”, The statement is quite apt taking into account

the present scenario.

Y Rapid economic reforms have been witnessed recently both at the national and

international levels.

Y Globalisation has gained momentum over these years and as a result the Indian

economy has integrated with the world economy, proving the whole world to be

‘global village’.

Solved Scanner CS Executive ProgrammeTax Laws and Practice Paper-4 Dec 2013

Publisher : Shuchita Prakashan ISBN : 9789350347492 Author : Dr. Arun Kumarand CA Raj K Agrawal

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