Company Law Content
Amalgamation (Merger and Take- Over)
- Amalgamation is the process of blending of two or more undertakings into one undertaking.
- It is conduct of two or more than two companies by which they make one company.
- The ordinary dictionary meaning of amalgamation is ‘combination’.
- The effect of amalgamation is to wipe out the merging companies and to fuse them into the new one created.
- There are two forms of amalgamation; merger & take – over
- Respective legal provision regarding amalgamation or merger are section 177 of Nepalese Company Act and few sections of BaFI Act 2063 BS ( See; respective legal provisions)
- Corporate combination of two or more than two companies to a single company.
Merger will take place by;
- Purchasing assets
- Purchasing shares
- Acquiring the assets and liability
- By scheme of arrangement
- A merger is the fusion or absorption of one thing or right into another, where one of subjects is of less dignity importance than the other. Here less important ceases to have an independent existence. When a bigger company with next smaller company wants to join in to one entity, such kinds of fusion of two or more company is called merger. The identity of one company ceases to exist.
Methods of merger
- By purchase of shares.
- Merger with holding company.
- Merger under a scheme of arrangement or compromise.
- Merger by scheme of winding –up.
- Merger by exchange of shares –followed by winding up.
- Winding up by scheme of exchange of share
- Merger in public interest in the order of government in India central govt. may order.
- In Nepal, for banking companies, NRB. Insurance Board, for Insurance Companies can suggest for the merger.
Take – over
- Take – over is the term which is used to describe the acquisition of one company by another generally by buying.
- A company wants to control the target company