Tools

Oppression and mismanagement petition timeline

Returns whether a shareholding clears the section 244 threshold, the statutory frame for disposal, and the present value of a litigated exit set against a negotiated one.

Companies Act, 2013, sections 241 and 244

The figures

Set to the worked example in the note. Figures entered stay in this browser: nothing is sent, nothing is stored.

The company and the stake

Turnover (INR crore)

INR 180 crore

EBITDA as a share of turnover (per cent)

Equity value as a multiple of EBITDA (times)

Stake held (per cent of issued share capital)

The litigated route

Marketability discount (per cent)

Professional cost to final order (INR crore)

INR 1.1 crore

Registered valuer and accounting (INR crore)

INR 0.15 crore

Months to a final, unappealed order (months)

Discount rate (per cent a year)

The negotiated route

Agreed discount off pro rata value (per cent)

Transaction and advisory cost (INR crore)

INR 0.25 crore

Result

The negotiated exit returns about INR 4.99 crore more than the litigated exit, on the figures entered.

30.8 per cent of the pro rata value of INR 16.20 crore: present value INR 9.02 crore litigated against INR 14.01 crore negotiated.

The arithmetic

Standing: 15 per cent of issued share capital against one-tenthClears the one-tenth limb without a waiverCompanies Act, 2013, section 244(1)(a)
Statutory frame: every endeavour to dispose of a petition within three months, extendable by up to ninety daysAbout six monthsCompanies Act, 2013, section 422(1) and (2)
EBITDA at 10 per cent of INR 180.00 crore turnoverINR 18.00 croreAn assumption stated in the note, not a provision
Equity value at 6x EBITDAINR 108.00 croreAn assumption stated in the note, not a provision
Pro rata value of a 15 per cent stakeINR 16.20 croreArithmetic on the lines above
Litigated route: marketability discount of 20 per centINR 12.96 croreCompanies Act, 2013, section 242(2)(b); the discount is an assumption stated in the note
Less professional cost to final order (INR 1.10 crore) and registered valuer and accounting (INR 0.15 crore)INR 11.71 crore at month 30An assumption stated in the note, not a provision
Discounted 2.5 years at 11 per cent a yeardivide by 1.2981An assumption stated in the note, not a provision
Litigated route, present value todayINR 9.02 croreArithmetic on the lines above
Negotiated route: agreed at 12 per cent off pro rataINR 14.26 croreAn assumption stated in the note, not a provision
Less transaction and advisory cost (INR 0.25 crore)INR 14.01 crore todayAn assumption stated in the note, not a provision
Difference: negotiated present value less litigated present valueINR 4.99 croreArithmetic on the lines above
As a share of pro rata value30.8 per centArithmetic on the lines above

The periods the note sets out

Three monthsfrom presentation of the petition, as the period within which every endeavour is to be made to dispose of itCompanies Act, 2013, section 422(1)
Up to ninety days morefrom the end of those three months, on reasons recorded by the PresidentCompanies Act, 2013, section 422(2)

Assumptions

An unlisted company, and one holder petitioning alone.
The share capital limb of section 244(1)(a), one-tenth of the issued share capital with all calls paid, is tested on the stake entered. The members limb and the waiver in the proviso turn on facts this tool does not take.
No interim receiver or investigation, and no dividend in the period.
Proceeds on the litigated route arrive at the end of the months entered and are discounted to today at the annual rate, compounded. The negotiated exit is received today.
The note names the horizon and the discount as the two figures that drive the result, and neither is in the hands of the petitioner. An appeal to the National Company Law Appellate Tribunal lengthens the horizon.
No figure here is a benchmark.

A figure returned here takes no account of the facts of any matter. It is information, not advice.

Read the note