Mergers and Acquisition Laws
Mergers and acquisitions are those terms which are related to taking over or purchase or in certain cases subsume of other entities in another entity which will either result in the formation of a new entity or merging of two entities and making it one which will not be a new one but will be one from that which is existing. Generally mergers are done to convert a loss making company to profit making company and that is why the profit making company takes over the loss making company.
Recently a new trend is also capturing the market which is the loss making company is merging with the profit making company and the end result of such a merger will be that the profit making company will loose its identity and will subsume in the loss making entity. This is called Reverse Merger.
In India mergers and acquisitions is governed by Companies Act and there are very strict procedural formalities to be complied with. Just to name some of them is the Order of the High Court is required for the Merger and the High court if satisfied that the scheme is workable will issue the order and will supervise the entire scheme right from inception. If at any time the High Court is of the opinion that the scheme is not workable then it may order for winding up of the company.
Mergers and acquisitions are the most acceptable form of business restricting which is widely accepted everywhere. With the use of this tool many sick companies are retrieving in nature and many loss making companies are getting subsumed in profit making companies. The basic idea behind the growth of merger and acquisition is Synergy Benefits which means that “One plus One is Greater than 2”.
Vidhikarya- Need in Legal Assistance.
We at Vidhikarya will guide and help you in all possible ways right from the making of the scheme till its approval is sought and post approval is sought implementation of the scheme as per the Order of the High Court.
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