COMPROMISE, ARRANGEMENT, AND AMALGAMATION IN CORPORATE RESTRUCTURING: A LEGAL OVERVIEW
The Companies Act, 2013 provides for various legal mechanisms that can be used by companies to restructure their operations, consolidate their assets, and achieve economies of scale. Two commonly used mechanisms are compromise and arrangement. Compromise and arrangement refer to a legal process under which a company can restructure its debt or equity capital, or both, in a manner that is acceptable to its shareholders and creditors. This process involves negotiations between the company and its stakeholders, followed by a court-approved plan of compromise and arrangement. The term “compromise” is not defined under Companies Act, 2013 and it has no legal meaning. Generally, Compromise presupposes a dispute. Compromise is an expression which implies the existence of a dispute such as relating to rights, which it seeks to settle. There can be no compromise unless there is some dispute e.g. as to the power to enforce rights or as to what those rights are. Arrangement contemplates all...