Amalgamation Services

Amalgamation Services

Amalgamation as defined in section 2(IB) of the income tax act 1961 is coming together of two or more companies with the aim of forming a new company. The proceedings undertaken are the same except that the surviving entity incorporates the asset base of other into its base. The shareholders of the respective companies will now be identified as shareholders of the new amalgamated company. It has gripped the world lately and is an excellent move in formation of a strong, stable and broad company. The initiatives are undertaken mutually for the expansion and growth of the company. The amalgamation may be preferred in the following cases:

• For expansion of the business or operations of a company
• For effective and economic handling of the business activities
• For achieving the targeted goals like growth and success efficiently
• For Elimination of competition between the companies
• For potential utilization of economic, financial and technical resources
• It may be preferred in case of public interests (by the Central Government in exercise of the powers conferred by section 396).

A company having vulnerable nature may prefer Amalgamation company as security backup. Walking by the phrase “union is strength” the companies adopt potential measures.