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Types of Restructuring

The document outlines various types of corporate restructuring, including organic and inorganic growth strategies, and emphasizes the need for restructuring to enhance shareholder value and improve business performance. It details different forms of restructuring such as financial, market, technological, and organizational, along with the legal framework governing these processes. Additionally, it lists various methods of restructuring like mergers, acquisitions, and joint ventures.

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0% found this document useful (0 votes)
29 views10 pages

Types of Restructuring

The document outlines various types of corporate restructuring, including organic and inorganic growth strategies, and emphasizes the need for restructuring to enhance shareholder value and improve business performance. It details different forms of restructuring such as financial, market, technological, and organizational, along with the legal framework governing these processes. Additionally, it lists various methods of restructuring like mergers, acquisitions, and joint ventures.

Uploaded by

Deergha Meena
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Types of Corporate

Restructuring

Dr. A. Sridhar
FCS, LL.M, Ph.D in Law
Assistant Professor
NALSAR University of Law
Mobile: 9989394290
Mail: [email protected]
Types of Growth

 Organic Growth
 It is through internal strategies, which may relate to business or financial
restructuring within the organization that results in enhanced customer base,
higher sales, increased revenue, without resulting in change of corporate
entity
 Inorganic Growth
 Inorganic growth provides an organization with an avenue for attaining
accelerated growth enabling it to skip few steps on the growth ladder. Like
Mergers, Amalgamations etc
Corporate Restructuring
 Corporate Restructuring is the process of significantly changing a
company’s business model, management team or financial structure to
address challenges and increase shareholder value. Corporate
Restructuring is inorganic growth strategy
Need and Scope of Corporate
Restructuring
 To enhance shareholders value
 Deploying surplus cash from one business to finance profitable growth in another
 Exploiting inter-dependence among present or prospective businesses
 Risk reduction
 Development of core-competencies
 To obtain tax advantages by merging a loss-making company with a profit-
making company
 Revolution in information technology has made it necessary for companies to
adopt new changes for improving corporate performances.
 To become globally competitive
 To increase the market share
 Convertibility of rupee has attracted medium-sized companies to operate in the
global markets.
 Competitive business necessitated to have sharp focus on core business
activities, to gain synergy benefits, to minimize the operating costs, to maximize
efficiency in operation and to tap the managerial skill to the best advantage of
the firm.
 By diversification of business activities, the minimization of business
risk is possible and it enables the firm to achieve at least the
minimum targeted rate of return
 With the integration of sick unit into the successful unit, the
adjustment of unabsorbed depreciation and write off of accumulated
loss is possible and thereby the successful unit can have strategic
tax planning
 To Improve the Balance Sheet of the company ( by disposing of the
unprofitable division from its core business)
 Staff Reduction
 Outsourcing its operations such as technical support and payroll
management to a more efficient 3 rd Party
 Rescheduling or refinancing a debt to minimise the interest
payments
 Shifting of operations such as moving of manufacturing operations to
lower-cost locations
Types of Restructuring
 Financial Restructuring
 It Deals with restructuring of capital base and raising fiancé for new projects.
 The reasons can be
 Poor Financial Performance
 External Competition
 Erosion or loss of market share
 Emerging Market Opportunities

 Market Restructuring and Technological Restructuring


 The Company plans to operate on its core competencies and technological
restructuring occurs when a new technology is developed that changes the way an
industry operates.
 Organizational Restructuring
 It involves establishing internal structures and procedures for improving the capability
of the personnel in the organization to respond to changes ( Like Including few
departments or eliminating few departments)
Legal Framework of Corporate
Restructuring
 Chapter XV of Companies Act, 2013, The Companies ( Compromise,
Arrangements and Amalgamation) Rules, 2016
 Chapter IV of the Companies Act, 2013, The Companies (share Capital
and Debentures) Rules 2014
 Income Tax Act, 1961
 Foreign Exchange Management Act, 1999
 Competition Act, 2002
 SEBI Regulations
 Indian Stamps Act, 1899
 Intellectual Property Rights
 Insolvency and Bankruptcy Code,2016 and Rules & Regulations thereon
 Mergers
 Types of Mergers
 Horizontal Mergers
 Vertical Merger
 Conglomerate Merger
 Congeneric Merger
 Reverse Merger
 Acquisition
 Amalgamation
 Consolidation
 Tender Offer
 Acquisition of Assets
 Management Buyout
 Purchase of Company as Resolution Applicant Under IBC Law
 Demerger
 Spin-Off
 Split -Up
 Joint Venture
 Equity Based JV
 Non-Equity based JV
 Strategic Alliance
 Reverse Merger
 Divestiture
Financial Restructuring
 Debt Restructuring
 Equity Restructuring
 Alteration of Share Capital
 Reduction of Share Capital
 Buy-Back of Share Capital

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