Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Planning and Strategy

Anand Pharma Ltd and Bhargava Labs Ltd merge, and both companies cease to exist. A brand-new company, Cura Health Ltd, is formed to take over both businesses and issues its shares to their shareholders. Which form is this?

This is amalgamation by consolidation, because both existing companies are dissolved and a new company is formed to take over their businesses. In absorption an existing transferee company survives, which does not happen here.

  1. AAmalgamation by absorption
  2. BAmalgamation by consolidationCorrect
  3. CDemerger
  4. DReverse merger

Explanation

When two or more companies combine to form a new company and all the combining companies are dissolved, it is amalgamation by consolidation. In absorption, one existing company survives and takes over the other. No division is hived off here, so it is not a demerger.

Did you get it right without looking?

One question tells you little. A timed set on Planning and Strategy shows your real accuracy, how long you take and where you lose marks.

Practise Planning and StrategyFree diagnostic mock

More Planning and Strategy questions