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
Question 1: What are the duties of the holder of a Tourist Enterprise Licence, as provided by the Tourism Authority Act? Question 2: What are the relevant consideration

Adequacy of consideration - Law of Contract Well provided that consideration is sufficient, or actual it necessitate not be adequate.  Hence the court will not compare the val

Discuss the importance of Media Media are important to agenda setting in two general ways: First by constructing and conveying simplified and often symbolic understandings of p

Arbitration However this is a dispute resolution mechanism whereas disputes are settled out of the court through arbitral tribunals or arbitrators that who make arbitral words

Question 1: Write brief notes on the following contractual terms:- (a) How an offer differ from an invitation to treat. (b) The principles governing goods wh

What is the prospective  why should they be liable , how the sings for emerge of ISP from the safe horbor either DMCA or Directive in Eu has been come within the court? What is

Statutory Provisions in Applicable in the absence of a deed However it has been stated that the rights and relations of partners for one another are governed through the conte

One night Mr Kokintou and Ms Mangetou, entered into a housethrough a window which was negligently left open by the owner of the house.  Whilst Ms Mangetou was keeping guard at the

QUESTION 1 Discuss the sources of the Mauritian law QUESTION 2 (a) Tom, Pim and Pam enter into a lease agreement. The agreement has already been signed by Pim and Pam.

Family and Medical Leave Act: There is a split among the federal circuit courts of appeal on whether or not public employees/officials may be considered "employers" and theref