Skip to content

CS Executive · Company Law and Practice · Compromise, Arrangement and Amalgamations - Concepts

Alpha Textiles Ltd proposes to transfer its entire undertaking, property and liabilities to Beta Fabrics Ltd, an existing company, under a scheme sanctioned by the Tribunal. Under the Explanation to section 232 of the Companies Act, 2013, how is this scheme classified?

It is a merger by absorption. Under the Explanation to section 232, when the undertaking, property and liabilities of one or more companies are transferred to another existing company, the scheme is a merger by absorption, not a merger by formation of a new company or a division.

  1. AMerger by formation of a new company
  2. BMerger by absorptionCorrect
  3. CA scheme involving division
  4. DDemerger into a subsidiary

Explanation

The Explanation to section 232 says that where the undertaking, property and liabilities of one or more companies are transferred to another existing company, it is a merger by absorption. Merger by formation of a new company requires transfer to a new company. Division requires splitting among two or more companies.

Did you get it right without looking?

One question tells you little. A timed set on Compromise, Arrangement and Amalgamations - Concepts shows your real accuracy, how long you take and where you lose marks.

Practise Compromise, Arrangement and Amalgamations - ConceptsFree diagnostic mock

More Compromise, Arrangement and Amalgamations - Concepts questions