Amalgamation is claimed to be an arrangement between two companies for their benefit and to curb completion between them. Two or more companies close to make a replacement company or a subsidiary of any one company.
The accounting principle 14 – Accounting for amalgamations recognizes two sorts of amalgamation:
Amalgamation within the nature of merger
In this sort of amalgamation, along with assets and liabilities, shareholder’s interest and business of the businesses also are amalgamated. All the subsequent conditions should be satisfied:
All the assets and liabilities of the transferor company are transferred to the transferee company.
Shareholders of transferor company having face value not less than 90% are transferred to the transferee company
The consideration for amalgamation is actually discharged by the difficulty of equity shares within the transferee company, apart from cash is purchased fractional shares.
The transferee company intends to hold on the business of transferor company
No adjustment is formed to the value of the assets and liabilities of the transferor company when amalgamated within the financial statements of the transferee company. However, to adhere to the accounting policies some exceptions could also be there.
The board of directors and top management discuss and choose the terms for amalgamation. Welegal Services LLP help the management to foresee the business opportunities or threat in such amalgamation
Approval of the precise supreme court is required for the amalgamating scheme. Welegal Services LLP assist for all the legal formalities regarding an equivalent .
Approval of shareholders and that of SEBI is additionally required for the amalgamation process
A new company is made and therefore the issue of shares as per the calculation is done to the shareholders of the transferor company. This calculation may be a complicated process and requires an expert knowledge application which is efficiently done at Welegal Services LLP
Liquidation of transferor company and simultaneous taking up by transferee company happens. it’s essential to value the asset and liabilities of the transferor company during this amalgamation process. We at Welegal Services LLP assure you the calculation to be fair and meticulous
The purchase consideration forms an integral part of the entire amalgamation process. This calculation has got to be such it’s cost-effective to both the corporate. At Welegal Services LLP, we’ve a fanatical and expert team for the calculation of Purchase consideration which is closely monitored by the team head.