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
Registered Companies: A registered company is formed by registration under the Companies Act. It is this type of company that people usually have in mind when they talk of "a

Nationality of criminal jurisdiction Nationality is the legal concept which provides a link between a State and persons living within that State. It determines the rights and o

Game theoretic approach to multiparty coalition The seminal work, for the study of game theoretic approach to multiparty coalition formation is Ricker's (1962) titled the theor

TYPES OF SUBSIDIARY LEGISLATION: However the definition of subsidiary legislation in s.2 of the Interpretation and General Provisions Act reflects the great variety of nomencl

Question: (a) Suspected Illegal, Unreported & Unregulated (IUU) Vessels calling into Mauritius Port are subject to a series of investigations, prior to authorizing unloading

Nuclear law The importance of international law relating to nuclear law lies in the fact that it regulates, conducts and prohibits the use of nuclear weapons. The United Nation

(A Safe Assign note : All work submitted will be checked for plagiarism using an automated tool developed by Blackboard. Work will be checked against a variety of sources including

Statutory power - mergers and winding up: It is usual to proceed under s.207 as there are technical difficulties over s.300 procedure.  The liquidator's powers to reach a comp

Self-Control : Most entrepreneurs believe they can do the job better than anyone else and will strive for maximum responsibility and accountability. An entrepreneur needs to maint

ISSUE OF NON-STATE ACTORS The concept of Non-state actor is a recent political development, which has, so far, eluded a concise definition. There are no treaties or conventions