Scheme of arrangement

A court-approved restructuring under Indian company law, used for mergers, demergers, capital reductions and the transfer of businesses between group entities.

The document sets out the share exchange ratio, the appointed date from which the transaction takes effect for accounting, and the treatment of every class of shareholder and creditor.

Schemes deserve careful reading in group structures. The exchange ratio determines how value moves between two sets of shareholders, and where both entities are controlled by the same promoter, the ratio is set by a valuer appointed by people with an interest in the answer.

Independent valuation reports are filed with the scheme. Read the assumptions, not the conclusion.