A scheme of merger of OJA Company Limited with MRN Company Limited was approved by the shareholders at an extraordinary general meeting and the exchange ratio of 3 shares of MRN Company Limited for 20 shares in OJA Company Limited was approved. The proposal was also okayed by a lending financial institution which held 45% shares in OJA Company Limited. The valuation was carried out by one of the Directors of OJA Company Limited, who was also a senior member of the Institute of Chartered Accountants of India. The valuation was affirmed by three independent valuers nominated by the shareholders in ge.nenil meeting. However, certain leasehold properties, under licence, which were not transferable were not taken into account in the valuation. While the scheme was awaiting the Court’s sanction, it was challenged 6y certain shareholders on the ground that the exclusion ofleasehold assets in the valuation made the scheme ‘unfair’. Decide giving reasons :
(i) Whether the contention of the shareholders is tenable?
(ii) What factors would the Court take into account in approving the exchange ratio? [May, 1995]
4. Explain the terms ‘compromise’ and ‘arrangement’. What are the powers of the High Court to enforce its orders relating to compromise and arrangement?
[November, 19941
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