Agreement of Amalgamation between Two Companies

Sangam Products

Agreement of Amalgamation between Two Companies

Merger is defined as the combination of one or more companies into a new entity. These include: The activities of the contributing company will continue after the merger. No adjustments are made to the book values. Shareholders of the acquired company who hold at least 90% of the nominal value of the shares will become shareholders of the acquired company. Mergers typically take place between larger and smaller entities, with the larger ones taking control of small companies. The first step in implementing a merger is to draw up an agreement that contains the conditions and means for implementing the merger, including the form of the proposed articles of association. It is desirable that the articles of association of one of the merged companies be adopted as the articles of association of the merged entity. Once the merger agreement has been established, it must be approved by the boards of directors of the merging companies and submitted to the shareholders of each of the merging companies for approval. If the shareholders approve the merger, the articles of the merger must be submitted to the register in the prescribed form with a declaration of solvency; Information on the Directors-General and the head office. Mergers usually take place between two or more companies operating in the same sector or those that have some similarity in business. Companies can join forces to diversify their business or expand their range of services.

The merger of companies has many advantages when we look at the current market conditions where the market continues to grow, develop and change rapidly. Some of the important benefits are listed below: A merger agreement printed on court paper or stamp paper acts as a legally binding document that sets out the terms of the merger under its various sections and clauses. Many documents such as articles of association, company memorandum, etc. are checked to create this agreement, which increases the authenticity of this document. These are therefore the different steps to be included in the drafting of a merger agreement. Take, for example, india`s automotive industry market leader, Maruti Suzuki. If the companies existed individually, critical customers would depend on Suzuki as they are a Japanese engine manufacturer and would choose Suzuki for reliability and efficiency, and the other group of people would rely on Maruti for excellent quality. This has made them the perfect couple to come together, now able to offer quality and reliability to their products together, and the statistics speak the same way by making them market leaders. If one of the merged companies has suffered business losses. This method is considered if the conditions of the merger of the nature of the merger are not met. In this way, one company is acquired by another, so that the shareholders of the acquired company are usually no longer proportionally involved in the equity of the merged company or the business activities of the acquired company usually do not have to be continued.

A merger agreement is a legally binding agreement or document between the parties who have agreed to merge their respective companies, and the agreement includes: since it is two or more companies that merge into a single company, there is a possibility of disputes, and these could become chaotic if such a document does not mention it, what to do in case of dispute, and also indicate the number of assets of each company The company contributed to the creation of the company. Thus, this document acts as a guardian of the peace for companies. The term merger has generally fallen out of common usage in the United States and has been replaced by the terms merger or consolidation. But it is still widely used in countries like India. A holding company that wishes to merge with one or more of its wholly-owned subsidiaries is not required to prepare and submit a merger agreement for shareholder approval if: The terms of the merger are determined by the board of directors of each company. The plan is prepared and submitted for approval. For example, the High Court and the Securities and Exchange Board of India (SEBI) must approve the shareholders of the new company when a plan is submitted. (c) by mutual agreement between the parties, without further action by the shareholders. Elon Musk once said, “My motivation for all my companies was to get involved in something that I think would have a significant impact on the world.” Similar to what Mr. Musk thinks, today we see many companies forming and growing, which contributes to the development of several countries and emphasizes the concept of globalization. Today, we also see the thirst of companies to grow rapidly.

This has led to the emergence of the concept of business merger both for the growth of companies and for the society to which they belong. Since two or more companies merge, a merger leads to the formation of a larger entity. The contributing company – the weakest company – is absorbed into the strongest acquiring company and thus forms a completely different society. This leads to a stronger and wider customer base and also means that the newly formed entity has more assets. On the other hand, if too much competition is eliminated, concentration can lead to a monopoly, which can be problematic for consumers and the market. It can also lead to a downsizing of the new company, as some jobs are duplicated and therefore make some employees redundant. This also increases the debt: by merging the two companies, the new company assumes the liabilities of both. The second type of merger is similar to a purchase. One company is taken over by another and the shareholders of the company being acquired do not hold a proportionate share in the equity of the company resulting from the merger. If the consideration for the purchase price exceeds the net asset value (NAV), the excess amount is recognised as goodwill. If this is not the case, it is recorded as a capital reserve.

A merger is a combination of two or more companies into a new entity. The merger is different from a merger because none of the companies involved survive as a legal entity. Instead, an entirely new entity is formed to accommodate the combined assets and liabilities of both companies. i.Two or more companies join forces to create a new companyii. Acquisition or merger of one by the other 1.The conditions are determined by the board of directors of the merging companies.2.A plan is drawn up and submitted for approval to the competent High Court.3.The consent of the shareholders of the incorporating companies is obtained, followed by the approval of SEBI.4.A new company is incorporated and shares are issued to the shareholders of the company absorbée.5.La transferred company is incorporated is then liquidated and all the assets and liabilities are taken over by the acquiring company. However, it should be remembered that the merger, as the name suggests, is nothing more than the fact that two companies become one. On the other hand, absorption is the process by which a powerful company takes control of the weaker company. • Competition between companies will be eliminated• R&D facilities will be increased• Operating costs may be reduced• Commodity price stability will be maintained The company is required to make an offer to pay for the shares of a dissenting shareholder at a price considered by the directors to be the fair value of the shares no later than seven days after the decision to accept the merger. If this offer is not accepted, either party may apply to the court for an order to determine the fair value of the shares. A shareholder who rejects and demands payment of the fair value of his shares does not lose any right other than the right to receive the fair value of his shares as a shareholder. However, this does not apply if he withdraws his statement of opposition or if the managers terminate the merger agreement. This type of merger involves not only the pooling of assets and liabilities, but also the interests of shareholders and the activities of these companies.

In other words, all the assets and liabilities of the acquired company become those of the transferring company. In this case, the activity of the transfer or the company must be continued after the merger. No adjustment of book values is foreseen. Among the other conditions that must be met, there is the fact that the shareholders of the selling company who hold at least 90% of the nominal value of the shares become the shareholders of the Vendée company. The merger is different from the merger because neither of the two companies mentioned exists as a legal entity. Through the merger process, a brand new entity is formed to combine the assets and liabilities of the two companies. If we talk about Maruti Suzuki (India) Limited, Maruti Udyog Limited faced many financial and labor law problems before the merger and did not have much demand for its products. On the other hand, Suzuki Motors had no infrastructure in India and was unsure of the potential market for car production when it entered motorcycle manufacturing with its joint venture with TVS Motor Company. Today, however, after the merger of the companies, it has developed to a large extent.