Scheme of arrangement
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A scheme of arrangement (or a "scheme of reconstruction") is a court-approved agreement between a company and its shareholders or creditors (e.g. lenders or debenture holders). It may affect 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).
In Australia, the relevant provisions for effecting a scheme of arrangement or reconstruction are located in Part 5.1 of the Corporations Act 2001 (Cth).
In South Africa, the relevant provisions for effecting a scheme of arrangement are found in the Companies Act 2008, No. 71 Of 2008, Sections 114 and 115.