CS Professional CRVI flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Scheme of Arrangement

NCLT-supervised restructuring under sections 230–232 of the Companies Act, 2013, requiring board approval, member and creditor meetings, 75% approval in value, and a sanction order that binds all stakeholders.

Fast-Track Merger

Section 233 route available to small companies, startups, and holding–wholly owned subsidiary pairs, requiring 90% member and creditor approval and no ROC or regulator objection within 30 days.

Slump Sale

Transfer of an undertaking as a going concern for a lump-sum consideration under section 2(42C) of the Income-tax Act, 1961; capital gains are computed on net worth and taxed as long-term if held over 36 months.

Demerger

Section 232 arrangement where an undertaking moves to a resulting company, which issues proportionate shares to the demerged company's shareholders; the cost of acquisition is apportioned between the two entities.

Buy-Back Ceiling

Section 68 of the Companies Act, 2013 caps buy-back at 25% of paid-up capital plus free reserves, or 10% of paid-up capital under the board route, with a solvency declaration and a one-year cooling period.

Open Offer Trigger

Under the SEBI SAST Regulations, 2011, crossing 25% voting rights or acquiring control requires an open offer for at least 26% of voting capital, with creeping acquisition capped at 5% per financial year.

Open Offer Price

The highest of the negotiated price, 60 trading days' VWAP, 26 weeks' VWAP, and the highest price paid by the acquirer in the preceding 52 weeks, as prescribed by the SEBI Takeover Code.

Delisting Reverse Book Building

Process under SEBI Delisting Regulations, 2021, where shareholders tender shares at or above a floor price and the discovered price is accepted only if the acquirer reaches 90% and public holding falls below 5%.

Control Premium

The extra amount a buyer pays above the unaffected market price to acquire a controlling stake, typically 15–30% for listed companies, reflecting the value of control rights and synergies.

Due Diligence Data Room

A secure virtual repository of legal, financial, tax, and operational documents made available to a prospective acquirer under an NDA, supporting representations, warranties, and indemnities in the acquisition agreement.

Weighted Average Cost of Capital

WACC = (E/V) × Ke + (D/V) × Kd × (1 − t), where Ke is the cost of equity from CAPM and Kd is the pre-tax cost of debt; used to discount free cash flows in DCF valuation.

Free Cash Flow to Firm

FCFF = EBIT × (1 − t) + Depreciation − Capital Expenditure − Increase in Working Capital; the cash available to all capital providers before financing cash flows, discounted at WACC.

Relief-from-Royalty Method

An intangible valuation technique that estimates the present value of royalty payments avoided by owning the asset, applying a market royalty rate to projected revenue over the asset's remaining useful life.

Registered Valuer

A professional registered under section 247 of the Companies Act, 2013 and the Registered Valuers Rules, 2017, whose report is required for share, asset, and insolvency resolution valuations.

Purchase Price Allocation

The process of allocating the acquisition consideration to identifiable tangible and intangible assets and liabilities at fair value, with the residual amount recognised as goodwill.

CIRP Trigger Threshold

A default of at least ₹1 crore is required to file a corporate insolvency resolution application under sections 7, 9, or 10 of the IBC, 2016, before the NCLT.

Section 14 Moratorium

During CIRP, the IBC prohibits suits, execution of judgments, asset transfers, security enforcement, and termination of essential supplies against the corporate debtor, providing a calm period for resolution.

Committee of Creditors

The decision-making body of financial creditors constituted by the IRP within 30 days, voting in proportion to financial debt; most resolutions, including plan approval, need a 66% voting share.

Section 29A Bar

Provision disqualifying promoters, connected persons, wilful defaulters, persons with NPA accounts over one year, and convicted persons from submitting a resolution plan under the IBC.

CIRP Timeline

The insolvency resolution process must be completed within 330 days including litigation, extendable only by NCLT order; failure leads to a liquidation order under section 33 of the IBC.

Section 53 Waterfall

Liquidation proceeds are distributed in order: CIRP and liquidation costs, secured creditors and workmen dues for 24 months, other employee wages for 12 months, unsecured financial debts, government dues, preference and equity shareholders.

Section 32A Immunity

Once a resolution plan is approved, the corporate debtor and its property are immune from prosecution for offences committed before CIRP commencement, provided the applicant is not a party to the offence.

Pre-Packaged Insolvency

Chapter III-A of the IBC allows MSMEs to negotiate a base resolution plan with creditors before formal CIRP, requiring 66% CoC approval and debt default thresholds prescribed by the Code.

SARFAESI Enforcement

The SARFAESI Act, 2002 lets secured creditors enforce security without court intervention after a 60-day notice, provided the debt is classified as a non-performing asset.

Section 12A Withdrawal

CIRP may be withdrawn with the approval of 90% of the committee of creditors, typically on settlement with the applicant, before a resolution plan is approved by NCLT.

Centre of Main Interests

Under the UNCITRAL Model Law, the COMI determines whether a foreign proceeding is a main proceeding; it is presumed to be the registered office and must be ascertainable by creditors.

Foreign Main Proceeding

A collective insolvency proceeding commenced in the state where the debtor has its centre of main interests, entitled to automatic recognition and relief, including a moratorium on individual actions.

IBC Chapter VI

Sections 234–235 of the IBC empower the Central Government to enter into bilateral agreements with foreign countries and allow NCLT to seek assistance from foreign courts or authorities.

Combination Thresholds

Under the Competition Act, 2002, a combination requires CCI notice if the acquirer group and target together have assets of at least ₹2,000 crore or turnover of at least ₹6,000 crore.

Green Channel Route

CCI's 2019 automatic approval mechanism for combinations with no horizontal, vertical, or complementary overlaps, where parties self-certify and file Form I without waiting for CCI clearance.

De Minimis Exemption

A combination is exempt from CCI notification if the target's assets are at most ₹350 crore or turnover at most ₹1,000 crore, as revised in 2024 under the Competition Act, 2002.

Key Managerial Personnel

Section 2(51) of the Companies Act, 2013 defines KMP to include the CEO, CFO, company secretary, and whole-time directors; the CS is a KMP under section 203 and is appointed by the board.