Mergers and amalgamations is one of the best processes of corporate restructuring that has gained substantial prominence in the present day corporate world. Restructuring usually means major changes and modifications in the corporate strategies and beliefs. This shift in strategic alliances is done with a desire to have an edge over competitors, eventually creating a new economic paradigm.
Through this business grow gradually over time but the new strategy of external expansion has completely changed the business sector across the world. This external expansion takes place in the form of merger, acquisitions, takeovers, and amalgamations, dramatically supporting the globalization of businesses. Merger, acquisitions, takeovers, and amalgamations have become essential components of business restructuring. The process brings separate companies together to form a larger enterprise and increase economies of sale.
A merger has been defined as an arrangement whereby the assets of two or more companies become vested in, or under the control of one company, which may or may not be one of the original two companies. The merger may also involve more than two companies. In the above instance after merger the transferor company(ies) will cease to exist & the transferee company will takes over & absorbs the assets, liabilities & business of the transferor company(ies) within itself.
The term amalgamation has not been defined under the Companies Act. When Two Or More Existing Companies Combine Together To Form A New Company, It Is Termed As Amalgamation. In This Transferor Companies Loose Their Existence And The Shareholders Become The Shareholders Of The New Company.