Distinguish between 'demerger' and 'slump sale'.
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · December 2015
Distinguish between 'demerger' and 'slump sale'.
Answer & Explanation:
Both Demerger/slump sale result in hiving of a division or undertaking, but the following are the differences. In slump sale values are not being assigned to individual assets and liabilities and the sale of undertaking is for a lump sum consideration called slump price. In demerger, valuation of individual assets and liabilities are mandatory. In case of demerger, the shareholders of demerged company has to be issued the shares of resulting company and in case of slump sale the issue of shares does not take place. Demerger results in reorganization of capital where as slump sale does not result in reorganization of capital. In case of demerger, the resulting company has to continue the business of transferred undertaking of demerged company, where as in slump sale it is not so.
Topics: Corporate Restructuring
Related Questions in this Topic
- Is it possible to restructure debts through reduction of capital? Support your answer with a decided case law.
- Indicate briefly the tax concessions available to a demerged company in terms of Income Tax, 1961.
- "While according approval to the scheme of amalgamation of two banking companies, Board of Directors need to give carefu...
- "Corporate restructuring strategies depend on the nature of business, type of diversification required with the object o...
- The approval of Tribunal is required for any scheme of reconstruction. The Tribunal considers minority interest while ap...