1. CORPORATE RESTRUCTURING Regulatory framework for Listed Companies & Strategies Suman Neeli ISBE-B(13)

2. GOVERNING PROVISION

3. TYPES OF RESTRUCTURING MERGER DEMERGER

4. RESTRUCTURING BIFR High Court Approving Authorities

5. MERGER “ Combining of two or more commercial organizations into one in order to increase efficiency and sometimes to avoid competition ”. MERGER REVERSE MERGER “ As a commercial term, it means when a Healthy Company (in terms of size, capital or listing status)is merging in a Weak Company (in terms of size, or unlisted)”. SECTION 391-394 of Companies Act, 1956

6. DEMERGER “ Division of a Company with two or more identifiable business units into two or more separate companies ” SECTION – 2(19AA) of Income Tax Act, 1961.

8. STOCK EXCHANGE’S ROLE REQUIREMENTS PERSPECTIVE Listing Agreement Compliances Stock Exchange Internal Norms Observations Compliance of Securities laws Compliance of Companies Act

9. Stock Exchange’s Norms Presently, Stock Exchange(s) are laying various other norms before giving approval to the Companies for ‘ Merger ’, ‘ Demerger ’

10. Stock Exchange Norms..contd MINIMUM CAPITAL REQUIREMENTS 1. Issued & paid up Equity Capital – Rs 10 crores (if there is a change in management/control) OR Issued & paid up Equity Capital – Rs 3 crores (If there is no change in management/control) AND 2. Minimum Net Worth – 20 crores (Post amalgamation) *BSE Stipulations

12. Stock Exchange Norms..contd LOCK IN REQUIRMENTS “ 25% of the newly issued capital pursuant to the scheme of amalgamation should be kept under lock in for 3 yrs from the date of listing” “ The lock in period are varied by the stock exchange on case to case basis” *BSE Stipulations

13. Compliance of Other Laws “ The Stock Exchange(s) alongside considers the compliance of Securities laws, regulations, rules etc. applicable on the Company and Companies Act also”

15. MERGER THROUGH BIFR AN EFFECTIVE WAY TO REVIVE YOUR SICK COMPANY

16. MERGER THROUGH BIFR EXEMPTION FROM TAKEOVER CODE Regulation 3(1)(j) of SAST Regulations, 1997 provides that: Nothing contained in Regulation 10, 11 & 12 shall applies to acquisition: j) Pursuant to a scheme : (i) framed under section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); ja) Exemption to restructuring under Securitization law (Change in mgt by the secured creditors)

17. MERGER THROUGH BIFR EXEMPTION FROM CL40A OF LISTING AGREEMENT Clause 40A as amended on 13 th April, 2006 gives exemption to BIFR referred companies: The Non-Promoters’ shareholding can be below 25% of the total capital of the company pursuant to BIFR Order in any rehabilitation scheme.

18. DEMERGER Reliance Natural Resources Ltd Reliance Capital Ventures Ltd

19. ISSUES

21. Case Studies

25. Benefits achieved…….. Particulars Amount (Rs.) 24th March 2006 Amount (Rs.) 20 th December, 2007 Value of the shares held by a shareholder as on record date (25 th Jan,2006) (A) 100 shares @928 92800 Shares in RIL 100 (@708) 70800 (@2700) 270000 Shares in REL 100 (@38) 3800 (@1900) 90000 Shares in RCOL 100 (@290) 29000 (@706) 70600 Shares in RCL 100 (@24) 2400 (@2376) 237600 Shares in RNRL 100 (@23) 2300 (@163) 16300 Total 108300 684500 Net benefit 15500 576200

26. REDUCTION OF CAPITAL

27. Types of Reduction of Capital Writing off Losses & Fictitious Assets Correction of Over- Capitalization Distinguishment of the Liability in respect of unpaid portion of face value. Distribution of accumulated profits by Payment to shareholders a part of share capital.

28. Reduction of Capital- A Strategic Step To Clean-up the Balance Sheet To rationalize the capital base Revival of Sick Company

29. RESTRUCTURING STRATEGIES What's Your Move??

30. FEW STRATEGIC MOVES Strategy I LISTING (Without offer to Public) Strategy II RAISING PROMOTERS’ HOLDING (Beyond 55%)

31. FEW STRATEGIC MOVES..contd Strategy III ACQUISITION OF LISTED CO. ( Exemption from Takeover Code) Strategy IV INCREASEING THE RESOURCES (Without raising Capital)

34. Strategy IB LISTING THROUGH MERGER Acquisition of Regional Listed Company(RSE) Merger of financially sound unlisted co with listed co Now your Company is ready for Listing INDONEXT LISTING DIRECT LISTING

39. Thanks a lot… Pavan Kumar Vijay