Dear Sirs
Please help me with any check list or points to be taken care off under the companies act 2013, to hive off or separate a business to a new company. Mine is an unlisted public company which wantes to separate one of its major business to a new subsidiary company. i guess, it would have to be public limited company itself.
I wanted advice as to the provisions of the act applicable and also the requisite approvals (Board, GM) and filings.
Please help.
You can go for demerger pursuant to scheme of arrangement under Sections 391 to 394 of Companies Act 1956 with the approval of High Court.
You can do sell off as per the provisions of Section 293(1)(a) of Old act or Section 180 of the New Act. This is called as Slump sale where the asset + liability is sold off to new Company. It may be for cash or for some other consideration. It has Income tax impact. If it needs to be tax neutral then do demerger. In demerger shareholders of the present company whose undertaking is sold become shareholders is new company to which this undertaking is sold in same ratio as present Company. Check 2(19AA) of IT act for definition of demerger.
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