,

MEANING OF MERGER DEMERGER

AND PROCEDURE FOR
AMALGAMATION OF COMPANY
-By Sowjanya N
 MEANING
■ MERGER
Merger is the process of combining two or more distinct entities in such a manner that it
amounts to not only accumulation of the assets and liabilities of the said entities but also the
said entities are organised into one business entity.

■ DEMERGER
A scheme of sub-division of an enterprise into smaller units or splitting up the unit into
more than one parts or separating one or more unit from the main enterprise and
constituting them into separate units from the main enterprise and constituting them into
separate units is called demerger.
 AMALGAMATION
■ Amalgamation is the blending of two or more undertakings (companies) into one

undertaking, the shareholders of each blending company substantially become the

shareholders of the other company which holds blended undertakings.

■ Purpose of Amalgamation:
• To extend the scope of operation of the company.
• For the purpose of reorganisation.
• To restructure capital in accordance with the Act.
• For diversifying risk.
• For minimizing tax liabilities.
• For developing a brand name.

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TYPES OF AMALGAMATION
Procedure for amalgamation of company
■ Board Meeting
■ Application to Tribunal
-National company tribunal
- Application in form NCLT- 1 along with
(i) Notice of admission in form No NCLT-2
(ii) Affidavit in form No NCLT-6
(iii) A copy of scheme of compromise or arrangement
(iv) Fee
■ Notice of Meeting
Form No CAA 2 to creditors, members, debenture holders
■ Advertisement of Meeting
One English and one vernacular newspaper
On companies website
■ Notice to statutory authority
Form No CAA 3 – central government, income tax authorities,
RBI, registrar of companies, official liquidator, competition
commission of India
■ Affidavit of service
■ Convene of Meeting
■ Report of Meeting – Form No: CAA 4
■ Petition for confirming compromise or arrangement
■ Date and notice of Hearing
■ Order on Petition

Conclusion