(43) X Ltd. goes into liquidation and a new company Z Ltd. is formed to take over the business of X Ltd. Internal reconstruction can be defined as the reorganization of the company, without liquidating the existing company and forming a new one. Chapter 5: Amalgamation of Companies; Chapter 6: Internal Reconstruction; Chapter 7: Liquidation of Companies; Appendix: Schedule-III to The Companies Act, 2013; Module-3 Initial Pages; Chapter 8: Financial Statements of Banking Companies Unit 1: Some Relevant Provisions of The Banking Regulations Act, 1949 The permitted entities (LLP or companies) are associated where: Description Reconstruction and Amalgamation The company wished to avoid being wound up and negotiated a scheme in which the existing shareholdings in the company would be transferred to a new company which would take over the company’s undertaking and assets as well as its debts. Final accounts of companies including managerial remuneration, disposal of profits and issue of bonus shares. 2. syllaBus accounting for companies – ii Objectives: l To develop an understanding about accounting treatment in case of amalgamation and reconstruction. Amalgamation is a type of integration processes used under an … Why Amalgamation is known to be in the nature of merger: INTRODUCTION: The subject assigned to me is very vast, interesting and timely and perhaps not susceptible to any precise definition. in each case other than under or in connection with a scheme of amalgamation or reconstruction not involving a bankruptcy or insolvency. Amalgamation is when two or more companies merge. 15.1. Amalgamation 2. Ans. Amalgamation refers to corporate reconstruction in which two or more companies come together and fuse to form a new company. External Reconstruction IV. 2. 6. In amalgamation, two or more companies are fused into one by merger or by one taking over the other. External reconstruction can also take place through amalgamation. In computing purchase consideration by ‘net asset method’ all assets including fictitious assets should be considered. Financial Accounting (B.Com.,BAF,BBI,BMS & other) MULTIPLE CHOICE QUESTIONS (MCQ) SESSION NO 01 1. (b) Section 394 and 395 provide for a scheme of Reconstruction and Amalgamation without winding up . The main objective of amalgamation is to achieve synergetic benefits which arise, when two companies can achieve more in combination than when they are individual entities. It is a process that involves combining of two or more companies as either absorption or as blend. Amalgamation refers to when two companies which are in the same line of duty come together to form one company. If the Company undergoes any process of reconstruction or amalgamation (whether or not involving the liquidation of the Company) and the Executive is offered employment by the successor or proposed successor to the Company or any Group Companies on terms which as a whole are no less favourable than those under … Prior to 1st April 1995, the accounting procedures for amalgamation were under three different treatment, that is, Amalgamation, Absorption and Reconstruction of companies. Amalgamation is a process in which two companies liquidate to create a new company, which takes over the business of the liquidating companies. The transferor companies lose their identity to form a new company (transferee company). It includes absorption of one company by the other company. Amalgamation is defined as a simple arrangement or reconstruction of business. (ii) External reconstruction (iii) Amalgamation. Accounting for Amalgamations Introduction This standard deals with accounting for amalgamations and the treatment of any resultant goodwill or reserves. The scheme of reconstruction was agreed as follows : (a) A new company to be formed “Sonam Ltd.” with an authorized capital of Rs. Amalgamation of companies involves liquidation of two or more companies, while external reconstruction involves liquidation of only one company, 2. The main difference between Amalgamation and Absorption is that Amalgamation is the legal process, in which two or more companies combine themselves to form a new company and Absorption is when two or more companies combined into an existing company.. Amalgamation vs. Absorption. In amalgamation, the identity of both the companies exist and survive. Ans. Provisions relating to merger, amalgamation and winding-up etc. 2. a new … 3. Liquidation of Companies. It is the conversion of two companies and two balance sheets into one company and one (combined) balance sheet. Two or more companies combining to form a new company is called absorption. If a new co XY Ltd. Is formed to take over the business of two existing companies, X Ltd. and Y Ltd. ,it is a case of amalgamation When two companies are merged and are so joined as to form third company or one is absorbed into other or blended with another, the amalgamating company loses its identity. The Institute of Chartered Accountants of India introduced a new Accounting Standard known as “Accounting Standard – 14” (AS-14) from 1.4.1995 … COMPROMISE, ARRANGEMENT, RECONSTRUCTION, AMALGAMATION AND MERGER OF COMPANIES Subject Name: Law Paper Name: Corporate Law Module Id: 16 Pre-Requisites: Knowledge of Companies Act 2013 and Companies Act 1956 Learning Objectives After reading this module, you shall be able to learn about the following: External reconstruction can also take place through mergers. SECTION 232. Notwith-standing anything contained in any law for the time being in force, no banking company shall be amalgamated with another banking company, unless a scheme containing the terms of such amalgamation has been placed in draft before the shareholders of each of the banking companies concerned separately, and … The merger means an arrangement whereby one or more existing companies merge their … l To acquaint students with the accounting procedure and in-depth knowledge of preparation of various accounts l To develop an understanding of the company … Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the … Amalgamation is the consolidation or combination of two or more companies known as the amalgamating companies usually the companies that operate in the same or similar line of business to form a completely new company whereas merger refers to the consolidation of two or more business entity to form one single joint entity with … Similarly, the shareholders of the old entity turn out as the … competing in similar business niche liquidate themselves to form a AMALGAMATION, ABSORPTION & RECONSTRUCTION Submitted by Guided by Vijay Somase Prof Mahale .S. Absorption 3.1 Internal Reconstruction 3.2 External Reconstruction Definition. Amalgamation is the combination of two or more companies into a new entity by combining the assets and liabilities of both entities into one. In amalgamation of two companies (A)Both companies lose their existence (B)Both companies continue (C)Any one company continues (D)None of the above 26. Amalgamation involving inter-company shareholding (AS-14 is silent on this point) 20. (1) Where an application is made to the Court under this Part for the approval of a compromise or arrangement and it is shown to the Court that the compromise or arrangement has been proposed for the purposes of or in … (1) Where an application is made to the Court under section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Court A. c) Amalgamation. c) Each share in Y Ltd. is valued at Rs. For e.g. (1) Filing of an application for purpose of reconstruction or companies involving merger/amalgamation or transfer of undertaking, property, etc. If the ABC Limited and DEF Limited are taken over by a new company … 1. companies/ holding subsidiary companies, cross border mergers, takeovers, amalgamation of companies in public interest etc. From the point of view of an accountant, external reconstruction is similar to amalgamation in the nature of purchase; the books of the transferor company are closed and in the books of the transferee company, the purchase of the business is recorded. are made effective under Companies Act, 2013 On 7 December 2016, the Ministry of Corporate Affairs (MCA) issued a notification1, whereby certain sections of the Companies Act, 2013 (‘New Act’) were notified to come into force. Main Difference. Where a bona fide reconstruction takes place to which the provisions of In Amalgamation, two or more companies combine to create a new company. Two or more companies are disbanded, and a new firm is established to hand over the business. 12.50 each. b) All the assets and liabilities of the two companies, except Investments are taken over. Reconstruction or Amalgamation of Companies Buyer’s Stamp Duty (BSD) and Seller’s Stamp Duty (SSD) reliefs are applicable to transfer of undertaking or shares in respect of a scheme for the reconstruction or amalgamation of companies if the relief conditions are met. Section 178. On the other hand, an external reconstruction is a form of corporate restructuring wherein the existing company is liquidated to give birth to a new company, for continuing the business of the existing one. Difference between External Reconstruction and Amalgamation 1 In external reconstruction only one company is involved while in amalgamation two or more companies are involved. The transferee company must be registered or incorporated in Malaysia or have increased its capital with a view to … Companies Act, 1956. c) Amalgamation. MERGER AND AMALGAMATION OF COMPANIES [Effective from 15th December, 2016](1) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown …
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