A type of merger – similar to a merger – brings together both corporate assets and commitments and shareholder interests. All the assets of the ceding company become those of the ceding company. To speed up the process, continuation items can be submitted at the same time as amalgam items. A short grouping is approved by the directors` decision board meeting and does not require shareholder approval. This is often faster than long form fusion. There are two types of short amalgams. When a company decides to merge, a shareholder is allowed to be derogatory. It does so by sending written dissent to the company at or before the convened meeting in order to provoke the merger. A derogatory shareholder is entitled to obtain fair value of the shares he held from the day before the merger approval decision, without taking into account a change in value resulting from the anticipated adoption of the merger decision.
The Corporate Act allows for the merger of two or more companies. In this case, these companies are merged or consolidated into a single entity. This merged entity is entitled to all the characteristics, rights, benefits and assets of all former companies. It is also subject to all the commitments and obligations of the former companies. These provisions are one of the most practical and useful features of the Company Act. The main features of the merger are: it avoids the need and the burden of transferring assets to a single unit; and existing contracts are maintained and should not be awarded. Merger is therefore a very desirable mechanism for the reconstruction of conglomerates or for the creation of a business association for corporate reasons. In some situations, it can also facilitate effective tax planning.
In the United States, the term merger has generally disappeared from public use and is being replaced by the terms merger or consolidation. But it is still widely used in countries like India. A merger is a combination of two or more companies into a new unit. Amalgamation is different from a merger, because none of the companies involved survive as a legal entity. Instead, a brand new entity is created to house the combined assets and liabilities of the two companies. The statutory declaration (see model legal declaration) must contain statements indicating that at the time the merger comes into force: as two or more companies merge, a merger results in the creation of a larger unit. The ceding company – the weakest company – is included in the stronger transfer company, and forms a completely different business. The result is a stronger and larger customer base, which also means that the newly created entity has more assets. A long-term merger requires each merging company to sign a merger agreement and submit it to a general meeting. The merger agreement defines the terms and means of execution of the merger and must include the following: a holding company wishing to merge with one or more of its 100% subsidiaries is not required to prepare and submit a merger agreement for shareholder approval if: the second type of merger is akin to a purchase.