CS Executive · Setting Up of Business, Industrial and Labour Laws · Business Collaborations
Tejas Foods Ltd. acquires 60% of the voting shares of Nirmal Dairy Ltd. by purchasing them from its existing shareholders. Nirmal Dairy continues to exist as a separate legal entity. How is this best described?
This is an acquisition or takeover. Tejas Foods has bought a controlling 60% of Nirmal Dairy's voting shares, so it gains control, while Nirmal Dairy continues as a separate legal entity. No company is dissolved, so it is not an amalgamation.
- AAn acquisition (takeover) giving control over the targetCorrect
- BAn amalgamation by consolidation
- CA liquidation of the target
- DA demerger of the target
Explanation
Buying a controlling stake makes Tejas the controlling shareholder, which is an acquisition or takeover. The target keeps its separate legal existence, so there is no amalgamation, liquidation or demerger.
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