Main advantages - mergers and winding up, Business Law and Ethics

Main advantages - mergers and winding up:

A scheme of arrangement under s.207 offers three main advantages:

(a)     it can be used in circumstances to which s.210 and s.280 do not apply.  As explained above it has only to be an "arrangement or compromise" of some sort with members or creditors;

(b)     in circumstances where s.207 is an alternative procedure a scheme of arrangement only requires approval by three quarters of the votes cast at each meeting.  This is a less stringent requirement than s.210 imposes since s,210 operates only if holders of 90 per cent of all the shares for which the offer is made accept the offer.  If there is doubt whether 90 per cent acceptance is obtainable a s.207 scheme is to be preferred.  But if (as in the Hellenic & General Trust Case - para 11 above) the court concludes that an identified minority has been denied the veto which s.210 would have given it is unlikely to give its approval under s.207.  Apart from technical points it would be unfair to do so;

(c)     the court order to implement the approved scheme under s.209(1) often saves substantial expense which could otherwise be incurred if the arrangement were effected in some other way.

Posted Date: 1/15/2013 4:13:44 AM | Location : United States

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