Merger of firms

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Punit Parekh (Querist)
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16 January 2011 Is it possible to merge two firms into an existing company in such a way that both the merging firms get 50% of the voting rights???
Will it affect the existence of the company in any way.
The whole exercise is to comply with sec. 47(xiii) & (xiv) of the I.T. act

CA Nitish Jain

CA Nitish Jain (Expert)
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16 January 2011 section 47 of IT act states the TRANSACTIONS NOT REGARDED AS TRANSFER.
as per sub-sections and clauses mentioned above,
(viii) Any transfer of agricultural land in India effected before the 1st day of March, 1970;

(ix) Any transfer of a capital asset, being any work of art, archaeological, scientific or art collection, book, manuscript, drawing, painting, photograph or print, to the Government or a University or the National Museum, National Art Gallery, National Archives or any such other public museum or institution as may be notified 753 by the Central Government in the Official Gazette to be of national importance or to be of renown throughout any State or States.

in no case, these sub-sections apply to the case mentioned.

however, voting rights can be equal by allotment of shares to the firms in such a way that the holdings of two firms become equal.
alternatively, there can be an agreement or arrangement defining the voting rights of various members.

no matter whosoever is included or deleted from register of members or change in voting rights, the existence of company will not be effected till it complies with the requirements of the companies act, 1956

Punit Parekh

Punit Parekh (Querist)
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16 January 2011 sir you have referred to wrong sub sections i have mentioned sec. 47(xiii) & (xiv).

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