Scheme of arrangement
Encyclopedia
A scheme of arrangement is a court-approved agreement between a company
and its shareholder
s or creditor
s (e.g. lenders or debenture
holders). It may effect mergers and amalgamations and may alter shareholder or creditor rights.
Schemes of arrangement are used to execute arbitrary changes in the structure of a business and thus are used when a reorganisation cannot be achieved by other means. They may be used for rescheduling debt, for takeovers, and for returns of capital, among other purposes.
In the United Kingdom, the relevant provisions for effecting a scheme of arrangement are found in the Companies Act 2006
, Part 26 (ss.895-901) and Part 27 (special rules for public companies).
Corporate law
Corporate law is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another. Corporate law is a part of a broader companies law...
and its shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s or creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s (e.g. lenders or debenture
Debenture
A debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note...
holders). It may effect mergers and amalgamations and may alter shareholder or creditor rights.
Schemes of arrangement are used to execute arbitrary changes in the structure of a business and thus are used when a reorganisation cannot be achieved by other means. They may be used for rescheduling debt, for takeovers, and for returns of capital, among other purposes.
In the United Kingdom, the relevant provisions for effecting a scheme of arrangement are found in the Companies Act 2006
Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
, Part 26 (ss.895-901) and Part 27 (special rules for public companies).