Professional Documents
Culture Documents
• Advantages of Demergers :
• 1. Improves leveraging capacity (a division/subsidiary may
be able to access the institution independently)
• 2. There may be scope to make separate Public Issue at
advantageous terms
• 3. Highly specialised departments can have better R & D by
separate entities
• 4 Tax neutral.
5 Legal Safeguards- mergers
• A. Companies Act :
• The Act prescribes the following formalities :
• i. A scheme of amalgamation must be prepared
clearly defining the purpose, structure and the terms.
• Most of the take over of sick units is done for tax planning.
The profit making Company takes over Companies with
accumulate losses to have them set-off against the current
and future profits.
• SICA gives the BIFR wider powers than those given to High
Court under the Companies Act to protect the investors.
• For example, there is no need to comply with
• Sec 391 to 395 (scheme of amalgamation),
• Sec 17 (alteration of M/A), Sec 23 (change of name),
• Sec 21 (reorganisation of Capital), Sec 100 to 106 (reduction in Capital),
Sec 224 (appointment of auditors),
• Sec 255, 256 (reconstruction of Board of Directors), Sec 198, 269 and
309 (appointment/remuneration of Managing Director etc).
10 Winding Up.
•
• DECLARATION OF SOLVENCY --
• In order to be effective, this declaration must be made within 5 weeks
immediately preceding the date of passing of the winding up resolution by
the members;
17. Creditors Voluntary
Winding Up
• Creditors’ voluntary winding up -