Disadvantage of a scheme of arrangement, Business Law and Ethics

Disadvantage of a scheme of arrangement:

The disadvantage of a scheme of arrangement is that it requires the preparation of elaborate documents and the observance of a strict procedure, including an initial and final application to the court and the holding of meetings.  All this is expensive.  Hence a scheme of arrangement is only suitable for large companies where substantial values or assets are affected.  Otherwise it is uneconomical.

 If a company which is or is about to be in voluntary liquidation proposes to make a composition with its creditors it has a choice between the following alternatives:

(a) a scheme of arrangement under s.207;

(b) an arrangement sanctioned by three quarters (in number and in value) of the creditors under CA: s.300.  This liquidation procedure is binding on a minority unless the court on the application of a creditor or contributory (member) orders otherwise;

(c) a compromise made by the liquidator in exercise of statutory powers under CA, s.241 or s.297(1)(a).  For this purpose he must obtain approval of members, creditors, committee of inspection or the court according to the circumstances of the case.

Posted Date: 1/15/2013 4:14:40 AM | Location : United States







Related Discussions:- Disadvantage of a scheme of arrangement, Assignment Help, Ask Question on Disadvantage of a scheme of arrangement, Get Answer, Expert's Help, Disadvantage of a scheme of arrangement Discussions

Write discussion on Disadvantage of a scheme of arrangement
Your posts are moderated
Related Questions
TAKE-OVER BID:                   If Company A ("the transferee company") offers to acquire shares of Company B ("the transferor") and the scheme or contract to which the off

Companys Constitution: The constitution of a registered company consists of two  documents, namely, the memorandum of association and the articles of association. The contents

Resolutions: A meeting reaches a decision by passing a resolution.  There are two kinds of resolution, ie. (a) an ordinary resolution which is carried by a simple majority

Ahtesh is the promoter to a company not yet incorporated. As promoter he bought two excavators on behalf of the company as the latter would be building and running a hotel. While t

Registration of Prospectus:  S.43 (1) provides that no prospectus shall be issued by or on behalf of a company unless, on or before the date of its publication, there has been

Explain about the codified systems. Codified (civil law) systems: It is a rule based approach to law making and it is designed to give a comprehensive code of laws for th

Humble, a local high school student, wished to buy a moped. He intended to use it to get to and from school which was 3kms away. He also had a part-time job involving some travelli

Q. What is phoenix-like activities? Phoenix activity and phoenix-like activities Many activities are referred to as "phoenixing" which do display phoenix-like characteristic

State Article 22 of air and outer space law Article  22  states  that  all  the  States  should  prevent  unnecessary  delays  to  aircraft,  crews, passengers and  cargo,  esp

Allotment of shares and debentures - mergers and winding up: When the scheme is before the court for final approval a minority may object on any of the various grounds indicat