ABC Bank Ltd. contemplates to merge with PQR Bank Ltd. Accordingly, draft scheme of amalgamation is placed before the Board of Directors of both the banks. The said scheme is aimed to be placed in the shareholders meetin

Boards of both the companies should give particular attention to the following: As per paragraph 6 of the master direction issued by RBI, the decision of amalgamation is approved by the Board of the Bank concerned with a two thirds majority and not just those present and voting. The values at which the assets, liabilities and the reserves of the amalgamated company are proposed to be incorporated into the books of the amalgamating company and whether such incorporation will result in a revaluation of assets upwards or credit being taken for unrealized gains. Whether due diligence exercise has been undertaken in respect of the amalgamated company. The nature of the consideration, which, the amalgamating company will pay to the shareholders of the amalgamated company. Whether the swap ratio has been determined by independent valuers having required competence and experience and whether in the opinion of the Board such swap ratio is fair and proper. The shareholding pattern in the two banking companies and whether as a result of the amalgamation and the swap ratio, the shareholding of any individual, entity or group in the amalgamating company will be violative of the Reserve Bank guidelines or require its prior approval. The impact of the amalgamation on the profitability and the capital adequacy ratio of the amalgamating company. The changes which are proposed to be made in the composition of the Board of Directors of the amalgamating banking company, consequent upon the amalgamation and whether the resultant composition of the Board will be in conformity with the Reserve Bank guidelines in that behalf.