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Sec. 2(41A)

Swati P (Chartered Accountant) (173 Points)

29 January 2010

As per Sec. 2(41A) which defines "Resulting Company" please state whether Resulting Company can be a existing company or is it necessary that Resulting Co. should be a New Company which is formed as a result of demerger?

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3 Replies

Amir (Learner) (4016 Points)
Replied 29 January 2010

Dear Swati,

Resulting co. can be an existing company as well provided all other conditions are fulfilled.

Eg:- A Ltd (in the Business of POWER & TELECOMMUNICATIONS)

Another Company B (in the business of TELECOMMUNICATIONS)

Now A Ltd. demerges it's Telecommunication business in B Ltd..

Max Payne (employed) (2569 Points)
Replied 29 January 2010

Resulting company is a new company.

The old company called demerged company, sells part of its undertaking, creating the resulting company. By the very difinition of Demerger, there are 2 companies remaining at the end of the excercise

Are u in doubt after reading the Final module of DT of ICAI? i have heard there is a confusing problem, where the demerged company amalgamates with another company on the same day of the demerger.

Please note that it is possible.

As per the decision taken in Marshall Sons and Co ltd, effective date of demerger is the date on which it is approved by members, and not the date on which court grants its approval to the scheme.

So there is a possibility that XY ltd company demrged became X Ltd and Y Ltd, then Y Ltd amalgamated with Z Ltd on the same day as it resulted from X Ltd, and became YZ Ltd

Shikha (Company Secretary) (27 Points)
Replied 29 January 2010

As per Sec. 2(41A) of the I.T Act, its not very clear whether the Resulting Company needs to be a new company or can be an existing company also. Why can a resulting company not be an existing company?