Approval of the scheme - mergers and winding up, Business Law and Ethics

Approval of the scheme - mergers and winding up:

A scheme of arrangement was agreed between Hambros and Hellenic whereby the shareholders of Hellenic were to have their shares in the company cancelled in return for cash compensation.  Hambros was to pay the compensation and then receive the same number of shares in Hellenic.  The scheme was approved at a meeting of Hellenic by a majority in number of the shareholders holding three quarters in value of the shares involved.  But a wholly-owned subsidiary of Hambros (MIT) held 53% of the shares in Hellenic and voted for the scheme.  Hellenic applied for approval of the scheme and was opposed by a Greek Bank, a 14% shareholder in Hellenic.  Its objections were that it wished to retain its membership and also that the cash received for its shares would be subject to heavy capital gains tax liability in Greece.

The Greek bank opposed the approval of the scheme before the court on two grounds.  First, MIT as a subsidiary of Hambros had a different interest in the scheme from the other shareholders of Hellenic.  MIT was Hambros indirectly; it was seeking to acquire the 47% of Hellenic which it did not (through MIT) already own.  There should therefore have been a separate meeting of the holders of the 47% of Hellenic shares not already under the Hambros' control through MIT.  At such a meeting the Greek bank (with 14% out of 47%) could have prevented approval by the required three quarters majority.

Secondly, the purpose of the scheme was to enable Hambros to acquire 47% of the shares of Hellenic.  (The device of cancelling the shares for cash and issuing new ones to Hambros was to save the stamp duty payable on a straightforward transfer of the shares - an example of the advantages of a scheme of arrangement).

It was argued that a scheme of arrangement should not be used in a situation for which the take-over bid procedure was appropriate.  Under take-over bid rules the required 90% acceptance (from the independent shareholders) would not have been obtained since the Greek bank held more than one-tenth of the outstanding 47% minority shareholdings.

Posted Date: 1/15/2013 4:06:59 AM | Location : United States







Related Discussions:- Approval of the scheme - mergers and winding up, Assignment Help, Ask Question on Approval of the scheme - mergers and winding up, Get Answer, Expert's Help, Approval of the scheme - mergers and winding up Discussions

Write discussion on Approval of the scheme - mergers and winding up
Your posts are moderated
Related Questions
Define the subordinate legislation briefly. Subordinate legislation: • Regulations: It directly applicable and self-executing, no require for member state to create own

Good Faith - meetings and resolutions: The directors must act in good faith when calling a meeting,.  Thus, in Cannon v Tasks, the directors called the annual general meeting

What is the effect of smuggling and distribution of drugs International Criminal Law does not refer to the traditional crimes like murder and theft. A crime of an international

QUESTION 1 Evaluate the circumstances under which an employer would be justified in terminating his worker's contract of employment under the Employment Rights Act QUESTION

Revival of a Dissolved Company: Liquidation leads on to dissolution of the company.  The court may, however, within the ensuing two years order that dissolution be rescinded a

Who would think a documentary about the collapse of a mammoth corporation could play out like a drama with the emotional power of Greek tragedy? But that is the impact of enroll:th

Economic and Social Council The Economic and Social Council (ECOSOC) is a specialized organ of the United Nations and was established, inter alia, to monitor and regulate human

Successive stages of a capital reorganisation: There was a sequence of general and class meetings to approve the successive stages of a capital re-organisation.  Out of 1,600

MSc Finance and Management 2012-13 Ethics in Finance Ethics in Finance, Assessment Answer ALL THREE questions. This should be your own unaided work (this is an ethics assessmen

Explain The criminal jurisdiction The criminal jurisdiction is exercised on the basis of the following: 1. Nationality 2. Territory 3. Universal jurisdiction and 4. Specifi