Introduction - Merger, De-merger, Amalgamation, Compromises & Arrangements, Company Law B Com Notes | EduRev

Company Law

Created by: Arshit Thakur

B Com : Introduction - Merger, De-merger, Amalgamation, Compromises & Arrangements, Company Law B Com Notes | EduRev

The document Introduction - Merger, De-merger, Amalgamation, Compromises & Arrangements, Company Law B Com Notes | EduRev is a part of the B Com Course Company Law.
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Introduction

Corporate restructuring is one of the method to achieve this objective. Mergers, demerger, amalgamation, compromise and arrangements are the different modes of corporate restructuring. The Companies Act provides the power to the Court for sanctioning schemes of compromise and arrangement.

Compromise

'Compromise' is a term which implies the existence of a dispute such as relating to rights. It means settlement or adjustment of claims in dispute by mutual concessions. If the members have to gave up their rights entirely. It will not be compromise [NFU Development Trust Ltd., Re (1973) 1 All E.R. 135]

There can be no 'compromise' unless there is first a dispute [Guardian Assurance Co., Re(1917) 1 Ch. 431].

Arrangement

The term 'arrangement' is of very wide import. It includes a reorganization of the share capital of a company by the consolidation of shares of different classes, or by the division of share into shares of different classes or by both these methods. All modes of reorganising the share capital, including interference with preferential and other special rights attached to shares, can properly form part of an arrangement with members [Investment Corp. of India Ltd., Re (1987) 61 Comp. Cas.92 (Bom)].

Amalgamation

'Amalgamation' is a legal process by which two or more companies are joined together to form a new entity or one or more companies are to be absorbed or blended with another and as a consequence the amalgamating company loses its existence and its shareholders become the shareholders of new company or the amalgamated company.

The shareholders of each amalgamating company become the shareholders in the amalgamated company. To give a simple example of amalgamation, we may say X Ltd. and Y Ltd. form Z Ltd. and merge their legal identities into Z Ltd. It may be said in another way that X Ltd. + Y Ltd. = Z. Ltd.

The word amalgamation is not defined anywhere in the Companies Act, 2013.

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