what is difference between amalgamation in nature of merger ,in nature of purchase & absorption.Also what is restucturing
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amalgamation
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As per my knowledge –
Amalgamation: - In amalgamation 2 or more companies come together & form new company. E.g. – A Ltd & B Ltd. are 2 companies are amalgamating & the a new company AB Ltd. Is formed.
Absorption: - In absorption where one company takes over the other company that is absorption. In amalgamation new company is not formed E.g. - A ltd. Absorbed B ltd. Then B ltd. Dissolved & there is only one company A ltd. This takes over the business of B Ltd.
If I am wrong please correct it
Amalgamation in nature of Merger-
There are five condition in this method if that conditions are fulfilled then it is called amalgamation in nature of Merger (that condition you will find in any book or in Module.)
Amalgamation in nature of Purchase-
If any one of the above five condition is not satisfied then we called that type of amalgamation is in nature of purchase.
If I am wrong please correct it
An Amalgamation in the nature of merger should satisfy the five conditions as given in AS-14 eg. all the assets and liab. must be acquired, the settlement must be made in equity shares etc. An amalgamation which doesnt satisfy even one of the five conditions shall be termed as "in the nature of purchase". Absorption is similar to amalgamation in the nature of purchase. One company acquires another company. HDFC Bank and Times Bank transaction was absorption. Whereas two companies coming together to form a new entity, where the existence of any of them is not vanished is amalgamation. Restructuring involves changing the nature of the existing business. That is selling the assets which are not required and paying off the loans, exchanging costlier loans for cheaper loans etc.
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