Structured Biiz

CORPORATE TRANSACTIONS

FUND RAISING

Further Issue of Shares / Securities

» Issue of shares / securities on rights issue basis - the Company issues additional shares to the existing shareholders in the proportion to their current shareholding;
» Issue of shares / securities on preferential issue basis - Shares / securities are issued to a selected group of shareholders / security-holders who are not the existing shareholders/security-holders of the Company.

Convertible Notes (CN)

» Convertible Notes are structured as debt investments but have a provision that allows conversion of the principal plus accrued interest into equity investment subsequently;
» Convertible Notes usually include a provision in which the notes automatically convert to equity, at a discount or at a set valuation, on the maturity date;
» Share valuation is not Compulsory. This makes it easy for Startups to raise funds without worrying about valuation.

CORPORATE TRANSACTIONS

Buyback of Securities

» Buyback is a process followed by Companies to buyback its own Shares from the existing shareholders / security-holders usually at a price higher than the market price.;
» Articles of Association must authorise buyback of shares;
» The Company needs to obtain board and shareholder's approval. For buyback upto 10% of the paid up equity share capital and free reserves, only board approval required;
» Debt Equity Ratio has to be less than 2:1 after buyback
» Transfer of fund to Capital Redemption Reserve Account.

Employee Stock Option Plan (ESOP)

» ESOP is an option given to the employees of the Company to purchase the stock of the Company at a future date at a pre-determined price;
» The Companies Act, 2013 and the rules framed thereunder describes the process for the issue of Employee’s Stock Options by Unlisted Companies;
» Listed Companies issuing ESOP needs to comply with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Fast Track Merger

» Fast Track Merger Process does not require court intervention i.e., the mandatory approval of the National Company Law Tribunal (NCLT);
» It requires the approval of the Shareholders and Creditors, the Registrar of Companies, the Official Liquidator and the Regional Director;
» The registration of such a scheme has the effect of dissolution of the Transferor Company without following the process of Winding Up;
» Less cost intensive and less time consuming;
» Fast Track Merger may be entered into between: Two or more Small Companies, or a Holding company and its Wholly-Owned Subsidiary Company, or such other class or classes of Companies as may be prescribed in the Act & the rules.