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QUERY REGARDING AS-14

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Ashish Kr Agarwal

Manager-Finance & Accounts

43 Points Posted on 05 May 2010

CAN ANY ONE EXPLAIN THE DIFFERENCE BETWEEN THE TWO CONDITIONS OF AMALGAMANTION AS PER AS-14

CON 1. SHAREHOLDERS HOLDING NOT LESS THAN 90% OF THE FACE VALUE OF EQUITY SHARES OF THE TRANSFEROR CO. BECOMES SHAREHOLDER OF TRANSFREE CO.

AND

CON 2. CONSIDERATION TO THE EQUITY SHAREHOLDERS OF TRANSFEROR CO. IS SATISFIED BY ISSUE OF EQUITY SHARES OF TRANSFREE CO. BUT CASH CAN BE PAID FOR FRACTION SHARES.

Replies (1)

Guest

These both conditions are for amalgamation in the nature of merger.

Explanation---

1st point-

It means the equity shareholders who hold 90% of the face value of equity shares in the co. which is sold(transferor co) should become shareholders of purchasing Co.

These 90% of shareholders should not hold any shares in purchasing Co. just before amalgamation.

2nd point---

Since the co. which is sold has to be compensated by purchasing Co. , So here in this case that selling Co. should be paid in equity shares of purchasing co.only by the purchasing co.

There may be chances when purchase consideration to be satisfied comes like 3247.33 shares. So in such cases 3247 equity shares will be issued and balance .33 fraction shares will be paid in cash by the purchasing Co.

Hope you have understood.