CS Professional June 2025 Question Paper Corporate Restructuring, Valuation and Insolvency

FOR CS PROFESSIONAL EXAM PREPARATION

CS Professional 2025
Question Paper ·
Corporate
Restructuring, Valuation
and Insolvency
EXAM YEAR TYPE

CS Professional 2025 Question Paper
SUBJECT DATE

Corporate Restructuring, Valuation and Insolvency June 2025

Notes · Sample Papers · Previous Year Papers · Mock Tests

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NEW SYLLABUS
536
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Roll No. .....................................

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Time allowed : 3 hours
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Maximum marks : 100
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Total number of questions : 6
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Total number of printed pages : 16
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NOTE : Answer ALL Questions.

PART–I

1. Pysunsmart Fire Protection Limited (PFPL) is a listed company on the Bombay Stock Exchange

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(BSE). It is engaged in the manufacture of industrial fire extinguishers. The company has

em due to company’s strong pipeline of upcoming
seen a steady growth over the past few years and has attained a robust market presence.

The company’s stock has been gainingsattention
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a new markets. As a result, the stock price of (PFPL) has
new products and expansion into

been steadily rising.

A and B have been close friends and business partners over years. Over time, they have

started investing jointly in several listed company, including PFPL.

C is a majority shareholder of a company “C holdings” and has also expressed his interest
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to purchase more shares in PFPL through C holdings and has been in talks with A, B,
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c. o and Z about a potential joint acquisition strategy to gain controlseover m the company.
s em g l a of PFPL. He believes
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Z a prominent investor has been closely monitoring the performance

ag that PFPL is undervalued relative to its growth prospects. He has identified that if the company’s

product pipeline succeeds, it could increase the company’s market capitalization significantly.

He already holds 20% shares in PFPL and is interested in increasing his stake further.

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While all these shareholders have not made any formal agreements with each other but
they have had multiple informal meetings where they discussed the possibility of working
together.
PFPL had conducted a buy back through an open offer in order to improve its earning
per share (EPS) and boost stock prices. Due to this, the total number of shares of PFPL
in circulation decreased and as a result the shareholding of one shareholder, Q, increased
from 24% to 28%.
PFPL is also considering proposals for merger with Sangam Limited, a manufacturer in same
product. PFPL has attained a robust market presence in North India but operating at a
much smaller scale in south. Merger with Sangam Limited will open the avenues to increase
its market share in South too. The board of directors of PFPL have shown keen interest
in doing premerger due diligence as they want to ensure the post-merger success.
Though they have not received any red flag from any other department but HR head who
is a part of premerger due diligence team has raised a concern. PFPL has a formal corporate
culture, with a hierarchical structure whereas the employees of Sangam Limited are young
and thrive in a culture that values innovation and informality. Sangam Limited operates in
a flat structure where decision making is quick and decentralized. The HR Department of
PFPL wants to draw attention to the problems that might come up regarding the cultural
integration and human aspects of combining these companies who are having starkly different
cultures. A meeting of Board of Directors has been called to discuss the matter.
Based on the above facts, answer the following questions :
(a) As an advisor to A, B, C and Z, guide them about the SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011, which regulate the acquisitions of large
stakes in listed companies. What are the typical steps and corresponding timelines
for the process advised by you ?

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(b) Q has approached you to seek guidance on whether the increase in his voting rights

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co 3 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
in PFPL due to the buyback of shares by the company attract the obligations under

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emand why ? s
sub-regulation

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(c) laThe acquiring companies often use cash deals or stock deals for acquisition. Differentiate
a
2011

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a between the two, enumerating the advantages of cash deals and stock deals. What
are the considerations to be kept in mind while making a choice between the two ?
(d) The HR Head strongly believes one modification that has great potential to affect
the merged entity is a change in the organizational structure. Regardless of whether
the change is large or small, planning and an intense analysis are vital to creating

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a decision-making and communication framework that will support post-merger objectives

e m in culture and organizational structure of Sangam
and help the new business grow. As the member of the HR team, what do you

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suggest to synchronise these differences

ag during the premerger diligence. (5 marks each)
Limited and PFPL especially

Attempt all parts of either Q. No. 2 or Q. No. 2A

2. (a) To classify a merger, one needs to look at the nature of companies involved and
the rationale behind the deal. The main types of mergers are Congeneric Merger,

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Horizontal Merger, Vertical Merger, Conglomerate Merger, and Reverse Merger.

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Classify the following mergers into the type of merger giving the justification
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for such

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classification :

gla (i) Facebook’s acquisition of Instagram.
a (ii) Combination of a computer system manufacturer with a UPS manufacturer.
(iii) Berkshire Hathway acquired Lubrizol.

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(b) Company X, has acquired Company Y, in a merger transaction. The acquisition is
considered to be in nature of purchase. As per the merger agreement, the fair value
of identifiable assets and liabilities of the company is 150 lakhs and 50 lakhs
respectively.
The purchase consideration is to be paid as follows :
One share of X and ` 40/- per share in cash in exchange of one share of Y.
Each share of X is valued at ` 80/- per share.
The total number of shares is of Y are 1,00,000.
Calculate the following from the above transaction in the books of transferee
company X :
• Purchase consideration
• Fair value
• Goodwill/Capital reserve.
(c) Briefly explain methodology for arriving at the offer price under Regulation 8(2) of
SEBI (SAST) Regulations, 2011.
Calculate the Offer Price in the case of direct acquisition of shares from the following
information (where shares are frequently traded on the stock exchange) :
(i) Negotiated price per share available of the target company are :
` 15, ` 13, ` 14;
(ii) Volume-weighted average price paid or payable for acquisitions :
` 14 (26 week); ` 16 (52 week)
(iii) Price paid or payable for any acquisition :
` 17 (26 week); ` 15 (52 week)
(iv) Volume-weighted average market price of such shares :
` 18 (30 days), ` 15 (60 days).

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(d) Under a “Scheme of Amalgamation”, “Acme Inc.” (Transferor Company) is being merged

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cotransferred to Beta Corp., resulting in Acme Inc. dissolving, with shareholders
with “Beta Corp.” (Transferee Company), where Acme Inc.’s assets and liabilities

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em a specific exchange ratio of Beta Corp. shares for their Acme Inc.gshares, a s
would be

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laaiming to achieve operational synergies and cost savings by combining operations
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receiving

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one entity.
In this respect, Managing Director of Transferee Company approaches you as a Practising
Company Secretary for seeking advice on the list of key documents required to be
filed in this scheme of amalgamation. Advise in the matter.

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co to Q. No. 2)

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OR (Alternate question

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2A. (i)
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As per the scheme of arrangement, ‘Software Undertaking’ of S India is proposed
to be transferred to S Software under Sections 391 to 394 of the Companies Act,
1956. One of the conditions of the scheme was that any excess in the value of
net assets of software undertaking transferred to the resulting company shall be applicable
for distribution to the shareholders of the resulting company.

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Regional Director of Northern Region, Ministry of Corporate Affairs (MCA) has raised

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objection in his affidavit filed with the High Court stating that excess, if any, in the

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value of the net assets of the software undertaking should be adjusted to the capital

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reserve as prescribed in AS-14 and not to the general reserve as proposed in the
a scheme of arrangement.
Decide the matter with reference to a decided case law.

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(ii) Apka Bank, one of the largest private sector bank, is willing to merge with Hamara
Bank, a small regional bank. Apka Bank wants to expand its footprint in rural sectors
where Hamara Bank has a strong presence. Merging with Apka Bank will provide
better technology and financial boost to Hamara Bank.
Here the amalgamation is to take place between two banking companies.
The Reserve Bank has discretionary powers to approve the voluntary amalgamation
of two Banking companies under the provisions of Section 44A of the Banking Regulation
Act, 1949.
You are required to enumerate the provisions of Section 44A of the Banking Regulation
Act, 1949 in a joint meeting of representatives of both the banks.
(iii) Subodh Consumer Products Limited (SCPL) decided to demerge its food and beverages
business into a separate entity, Subodh Foods Limited (SFL). The demerger allowed
SCPL to concentrate on its core products line while its food and beverages business
could be more effectively managed by SFL. The demerger took place within the
meaning of Section 2(19 AA) of the Income-tax Act, 1961. N who was holding 100
shares in SCPL was allotted 100 shares in Subodh Foods Limited along with the
shares in resulting company as per the swap ratio.
N seeks your advice to calculate the following as he intends to transfer some of
his shares after demerger :
(a) Cost of acquisition of shares in the resulting company.
(b) Cost of acquisition of shares in the demerged company.
(c) Period of holding of shares of the resulting company.

1/2025/CRVI/NS Contd. ........

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(iv) ABC Ltd., a company registered under the Companies Act, 2013, providing Information

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Technology & allied services, wants to merge with its USA based wholly owned
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e on the matter citing the recent amendments etc. if any.
holding company, Silicon Valley Inc. Managing Director of ABC Ltd. seeks your
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advice
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PART-II
3. (a) Newrotechnologies Limited is a tech company that needs to find out its valuation
for next round of funding. To estimate its fair value, it is planning to use Market
Comparable Approach, which involves comparing it with companies which are similar

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. the following information for this purpose :
in size, industry and financial characteristics.

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The chief financial officer has gathered

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Comparable Companies in the
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Company A : P/E Ratio a = 18
Company B : P/E Ratio = 20
Company C : P/E Ratio = 22
Company D : P/E Ratio = 21

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The financials of Newrotechnologies Limited for the year ending 31st March, 2024

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are as follows :

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Net income is ` 20,00,000.
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ag Using the above information, calculate the estimated price per share and estimated
value of Newrotechnologies Limited.

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(b) (i) Ram purchased 100 shares of M/s. T Ltd, a listed company, @ ` 750/- per

share on May 2, 2024. M/s T Ltd. declared 40% & 50% dividend on

September 15, 2024 and on March 15, 2025 respectively. Market value of

share of T Ltd. on May 2, 2025 is 1000/- per share.

Calculate the return of equity investment in T Ltd. (face value per share is

` 10/-)

(ii) “In order to ensure authenticity and to have a unique reference number of

the valuation reports, it has been decided to provide a Valuation Report

Identification Number (VRIN) for each valuation conducted under the code.”

Comment on the statement on the basis of recent IBBI circular.

4. (a) PQR Ltd. is in the process of getting its securities listed on the stock exchange.

The company needs to get the valuations done as per the requirements of SEBI.

The Board of Directors have proposed the name of M/s Sunidhi and Associates,

a partnership firm, to be appointed as the valuers for the above mentioned purpose.

In the light of the provisions of Rule 3 of The Companies (Registered Valuers and

Valuation) Rules, 2017, a partnership firm becomes ineligible to be appointed as registered

valuer in circumstances stated in the above mentioned rule.

As the Company Secretary of PQR Ltd., state such circumstances to confirm that

M/s Sunidhi and Associates do not fall under any of the ineligibility criterion.

1/2025/CRVI/NS Contd. ........

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(b) Company X owns many businesses and it also operates a manufacturing division that

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coY is interested in acquiring the entire manufacturing division sofem
manufactures and sells electronic devices.

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em X that sells electronic devices as a going concern.
Company

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laIn the sale agreement, Company X transfers its entire manufacturing division ofaelectronic
company

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a devices, including all its assets and liabilities, to company Y.
No values are assigned to respective assets or liabilities of the manufacturing division.
The lump sum consideration for the sale is agreed upon between Company X and
Company Y.
In the background of the case, discuss the category of transaction between Company

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X and Company Y and also discuss rationale behind such transaction by Company
X in general and process involved .in such transfer.
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ag PART-III
5. (a) XYZ Limited, was undergoing a Corporate Insolvency Resolution Process (CIRP) under
the Insolvency and Bankruptcy Code (IBC), 2016. While the company was in CIRP,
the Bombay Stock Exchange (BSE) sought to take a legal action against the company
for non-compliance with the listing regulations. BSE wanted to recover the penalty

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amount from the Company failing which, the BSE warned the company of potential

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. Debtor), discuss,
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delisting and also suspending the trading of shares of XYZ Limited.

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e and Bankruptcy Code
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As the Resolution Professional (RP) of the XYZ limited (the Corporate

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citing a relevant case law and provisions of the Insolvency

g a could exercise its regulatory
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(IBC), 2016, whether the BSE, as a stock exchange,
powers against a company undergoing insolvency proceedings ? How can the Bombay
Stock Exchange recover the amount of penalty from XYZ Limited ?

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(b) An application filed by an operational creditor under Section 9 of the Insolvency
and Bankruptcy Code (IBC), 2016, was admitted by National Company Law Tribunal
(NCLT) and Mr. Goel has been appointed as the Interim Resolution Professional
(IRP). Section 20 of the Code mandates Mr. Goel (IRP) to run management of
operations of corporate debtor as a going concern. In the light of provisions of the
Insolvency and Bankruptcy Code (IBC), 2016, mention the authorities available to
IRP to run the business as a going concern in the above matter.
(c) SPM bank extended credit facilities to Anuj Constructions (The Principal Borrower),
a proprietary firm, in 2023. Gita Steel Limited (The Guarantor) provided guarantee
for credit facilities provided to Anuj Constructions by the SPM bank. Anuj Constructions
(The Principal Borrower), defaulted in the repayment of credit facilities and hence
the facilities were declared as Non-Performing Assets. Anuj Constructions repeatedly
assured the bank to repay the outstanding amount of ` 11,45,23,535, but failed and
SPM bank issued notice to Anuj Constructions.
SPM bank also issued notice to Gita Steel Limited (The Guarantor) under Section
4(1) of the Insolvency and Bankruptcy Code (IBC), 2016, demanding the outstanding
amount.
Failing to receive any positive response from either of the parties, the bank proceeded
to file an application before NCLT under Section 7 of the Code for initiating CIRP
proceedings against Gita Steel Limited.
The Board of Directors of Gita Steel Limited argued that under Section 7 of the
Insolvency and Bankruptcy Code (IBC), 2016, an application can be filed by financial
creditor only against the Corporate person.

1/2025/CRVI/NS Contd. ........

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Section 7 of the Code cannot be legitimately invoked by the bank against Gita Steel

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o of Anuj Constructions (The Principal Borrower), who had committedem
Limited (being a Corporate Debtor) concerning guarantee offered by it in respect of
a credit.cfacility
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default
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ag In the background of the matter, discuss “Corporate Person” and “Corporate Debtor”
under the provisions of IBC and referring to the relevant case law, discuss the tenability
of arguments put forward by the Board of Directors of Gita Steel Limited.
(d) The Committee of Creditors (CoC) of Golconda Industries approved a resolution plan

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by voting share of 100% in voting held on 17.1.2024. Thereafter, X (the Resolution

em the pendency of the application for approval of
Professional) submitted the application for the approval of resolution plan before the
Adjudicating Authority (AA). s
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During
resolution plan before thegAA, ex-promoter of Golconda industries submitted revised
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settlement proposal under Section 12 A of the Code and filed an application to NCLT
seeking to keep the resolution in abeyance. The application filed by the ex-promoter
was rejected by the NCLT. Hence, he filed an appeal before NCLAT against the
NCLT order.

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In the light of the provisions of the Insolvency and Bankruptcy Code, 2016, whether

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an application under section 12A of the Insolvency and Bankruptcy Code (IBC), 2016,

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can be entertained by NCLT after the approval of resolution plan by CoC and filing

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of application before NCLT for approval of resolution plan by the Resolution
a Professional ? Citing the relevant case law, discuss as to what will be the merit of
appeal filed by the ex-promoter of Golconda Industries against the order of NCLT.

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Attempt all parts of either Q. No. 6 or Q. No. 6A

6. (a) A director of a company in CIRP had moved the Hon’ble NCLT, Mumbai Bench,

seeking the right to participate in the meetings of the CoC and access all the documents

and/or information including the resolutions plans being discussed in the meetings of

the CoC, for effective participation in the meetings.

The Hon'ble NCLT on August 1, 2018 held that the directors have the right to

attend the CoC meetings as per Section 24 of the Code, however, the directors

could not receive information that is considered confidential by the resolution professional

or the CoC, including the resolution plans.

Thereafter, the Directors filed appeal before NCLAT for treating the papers as confidential

by the RP. In the appeal, the decision of the NCLT was upheld by the NCLAT

on August 9, 2018.

The director then moved the Supreme Court, challenging the decision of the appellate

tribunal.

Decide the matter with reference to relevant case law.

(b) “While the Insolvency professionals assist in the insolvency resolution proceedings

envisaged in the Code, the Information Utility, on the other hand, collect, collate,

authenticate and disseminate financial information.” Enumerate the obligations of information

utility as per provision of section 214 of IBC.

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(c) Agastu Industries Limited, a medium sized company had been facing financial difficulties

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for the past few years due to poor management and an inability to cope with its

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increasing operational costs. Also the company’s funds were being used for personal
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a related expenditures. These actions led to a significant depletion of company’s cash
expenses of the directors like purchase of high end vehicles and other non-business

reserves. The company had to finally face a liquidation order from NCLT.

The NCLT appointed Mr. Jayant Nanda as liquidator to wind up the company and

liquidate its assets.

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However, it came to the light that Mr. Jayant Nanda had prior business relationship

with one of the major creditors PQR .Corporation and he is giving preferential treatment
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to PQR Corporation by prioritizing

negotiating assets sales at lower prices to benefit PQR Corporation.

A group of creditors filed a petition in the Hon’ble Delhi High Court for removal

of Mr. Jayant Nanda as the liquidator accusing him of conflict of interest. Discuss

the validity of the petition in the light of the provisions of the Companies Act, 2013.

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Bhawna Clothing Limited (The Corporate debtor) was placed under Corporate

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Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016

ag in Jan., 2024.

Mr. N was appointed as the Interim Resolution Professional (IRP) and the committee

of creditors was also formed.

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During the CIRP process, the IRP was required to send notices to the members
of CoC, members of the suspended Board of Directors and other participants entitled
to attend the meetings.
In April, 2024, Mr. Goswami, a participant other than member of CoC, raised an
issue in the meeting of creditors that he had not received any prior notices of the
CIRP meetings and questioned the legitimacy of decisions taken in the meetings he
had missed.
Highlighting the provisions of Regulation 20 of the Corporate Insolvency Resolution
Process Regulations relating to service of notice by electronic means, decide about
the legitimacy of decisions taken in the meetings Mr. Goswami had missed. Is there
any obligation on the part of IRP for updation of e-mail ID while serving notice
by electronic means ?
OR (Alternate question to Q. No. 6)

6A. (i) “To alleviate the compliance burden for Insolvency Professionals (IPs), a set of forms
on an electronic platform has been created by the IBBI to capture the details of
the voluntary liquidation process. These forms are vital for the voluntary liquidation
procedure under the Insolvency and Bankruptcy Code (IBC), as they enable systematic
and transparent record keeping and seamless reporting”. Highlight the advantages and
the documentation with timelines in view of the recent amendment via IBBI Circular
dated 28th June, 2024.

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(ii) A company ABC Ltd. is undergoing a prepackaged insolvency resolution process under

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IBC, 2016. The company has appointed an Interim Resolution Professional (IRP) to

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e their role and vesting of the management with IRP during the insolvency gprocess.
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oversee the insolvency process. The management of Corporate Debtor is concerned

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about
a Discuss the provisions of Vesting management of corporate debtor with resolution
professional, if any.

(iii) Sujan Technologies Pvt. Ltd. faced serious allegations of financial mismanagement,

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excessive debts and non-compliance of statutory filings. The non-compliance issues

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led to an inspection and investigation being ordered by the Registrar of Companies

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(ROC). The inspection of the company
g submitted. Severe irregularities relating to falsification of
and investigation report awas

accounts was reported and hence prosecution under the Companies Act was initiated

in the court of law against the directors. As the investigation of the Company is

already complete, the Board of Directors of Sujan Technologies Pvt. Ltd filed an

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application for removal of name of the company from the Register of Companies

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(ROC). The company has not continued with any of its business or operation for

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a period of two immediately preceding financial years. The ROC rejected the application

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citing the provisions of Section 248 of the Companies Act, 2013.

a Referring to the relevant provisions, discuss the tenability of the application filed with

ROC for removal of name.

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(iv) Mr. X was appointed as a Liquidator in the liquidation process of ABC Limited.

In the process, he is required to prepare a preliminary Report as per Regulation

9 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process)

Regulations, 2017. Discuss contents of such Preliminary Report as well as timelines

prescribed for the same.

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1/2025/CRVI/NS Contd. ........

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