Merger De-Merger

In short, De-Merger means separation of a large company into one or more small companies. Section 232 of Chapter XV of the Companies Act 2013 deals with mergers and amalgamation including demergers. A demerger is a form of corporate restructuring which is undertaken by companies to promote specialization.

Demergers are undertaken for two reasons. Firstly, for corporate restructuring and secondly to give effect to the family partition where family-controlled companies. In case of demerger as corporate restructuring, the undertaking is transferred from the transferor company to existing transferee company.

A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions (M&A) are commonly done to expand a company's reach, expand into new segments, or gain market share.

Mergers combine two separate businesses into a single new legal entity. True mergers are uncommon because it's rare for two equal companies to mutually benefit from combining resources and staff, including their CEOs. Unlike mergers, acquisitions do not result in the formation of a new company.