Unit 1 corporate restructuring
- 1. Corporate Restructuring Under COMPANIES ACT 2013 BY ANJALI DIXIT ASSISTANT PROFESSOR FACULTY OF JURIDICAL SCIENCES RAMA UNIVERSITY
- 2. Corporate Restructuring Corporate restructuring may be defined as a conscious effort to restructure policies, programmes, products, processes and people to serve the redefined policies, programmes on a sustainable basis, because most of the restructuring policies are carried out with an impulsive reaction to the market variables or internal problems, without a serious attempt of looking at long-term (or sustainable) results.
- 3. Corporate Restructuring NEED AND SCOPE OF CORPORATE RESTRUCTURING Corporate Restructuring is concerned with arranging the business activities of the corporate as a whole so as to achieve certain predetermined objectives at corporate level. Such objectives include the following: orderly redirection of the firm's activities; deploying surplus cash from one business to finance profitable growth in another; exploiting inter-dependence among present or prospective businesses within the corporate portfolio; risk reduction; and development of core competencies.
- 4. Corporate Restructuring Scope for corporate restructuring The Purpose (Quantitative & Qualitative Results and their sustainability People related restructuring Process restructuring Product restructuring Restructuring of Value- chains, Prices, Territories, Value-drivers Restructuring of Assets facilities Sills, Knowledge, Wages, Relationships & Roles Restructuring of Core- competencies Restructuring of Ownership Patterns, Entrepreneurial & Knowledge Workforce Restructuring of Market-related Variables & Responses
- 5. Corporate Restructuring • Various types of corporate restructuring strategies
- 6. Corporate Restructuring Types of Corporate Restructuring • Financial Restructuring • Organisational Restructuring
- 7. Corporate Restructuring • Reasons for Corporate Restructuring • Corporate restructuring is implemented in the following situations • Change in the Strategy • Lack of Profits • Reverse Synergy • Cash Flow Requirement
- 8. Corporate Restructuring • Characteristics of Corporate Restructuring • To improve the Balance Sheet of the company (by disposing of the unprofitable division from its core business) • Staff reduction (by closing down or selling off the unprofitable portion) • Changes in corporate management • Disposing of the underutilised assets, such as brands/patent rights. • Outsourcing its operations such as technical support and payroll management to a more efficient 3rd party.
- 9. Corporate Restructuring • Types of Corporate Restructuring Strategies
- 10. Corporate Restructuring Salient Features of Companies Act, 2013 relating to Corporate Restructuring (Section 230- 240) National Company Law Tribunal to assume jurisdiction of High Court.Section 230(2) Application for compromise or arrangement to be accompanied by an affidavit, disclosing all material facts relating to the company. Reduction of capital if any included in the compromise or arrangement; 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 funds requirement after CDR and the conformity to liquidity test etc.