Merger in Joint Stock Companies
Introduction
Mergers or amalgamation, result in the combination of two or more companies into one, wherein the merging entities lose their identities. No fresh investment is made through this process. Howeverof shares takes place between the entities involved in such a process. Generally, the company that survives is the buyer which retains its identity and the seller company is extinguished. A merger can also be defined as an amalgamation if all assets and liabilities of one company are transferred to the transferee company in consideration of payment in the form of equity shares of the transferee company or debentures or cash or a mix of the above modes of payment. An acquisition, on the other hand, is aimed at gaining a controlling interest in the share capital of acquired company. It can be enforced through an agreement with the persons holding a majority interest in the company's management or through purchasing shares in the open market or purchasing new shares by private treaty or by making a take-over offer to the general body of shareholders. Joint stock company is the most dominant business form for organised and large industrial and commercial activities. The corporate and industrial sectors are in a sense inseparable as a substantial part of organised industrial activity is conducted by joint stock companies. Questions like what to produce, how much to invest, where to raise finances from, how much to spend on R&D and advertisement, where to get technology from, at what price to sell and in which markets, how to diversify, etc. are decided at company level and not by the factory management. Joint stock companies also undertake a variety of services ranging from transport, distribution, finance, health and media. The corporate sector is important for mobilizing and utilising household savings for making new investments. It is a major recipient as well as supplier of foreign investment.
Mergers And Acquisitions Of Companies Under The Joint Stock
Mergers or amalgamation, result in the combination of two or more companies into one, wherein the merging entities lose their identities. No fresh investment is made through this process. Howeverof shares takes place between the entities involved in such a process. Generally, the company that survives is the buyer which retains its identity and the seller company is extinguished. A merger can also be defined as an amalgamation if all assets and liabilities of one company are transferred to the transferee company in consideration of payment in the form of equity shares of the transferee company or debentures or cash or a mix of the above modes of payment. An acquisition, on the other hand, is aimed at gaining a controlling interest in the share capital of acquired company. It can be enforced through an agreement with the persons holding a majority interest in the company's management or through purchasing shares in the open market or purchasing new shares by private treaty or by making a take-over offer to the general body of shareholders. Joint stock company is the most dominant business form for organised and large industrial and commercial activities. The corporate and industrial sectors are in a sense inseparable as a substantial part of organised industrial activity is conducted by joint stock companies. Questions like what to produce, how much to invest, where to raise finances from, how much to spend on R&D and advertisement, where to get technology from, at what price to sell and in which markets, how to diversify, etc. are decided at company level and not by the factory management. Joint stock companies also undertake a variety of services ranging from transport, distribution, finance, health and media. The corporate sector is important for mobilizing and utilising household savings for making new investments. It is a major recipient as well as supplier of foreign investment.
Mergers And Acquisitions Of Companies Under The Joint Stock