The fusion or absorption of one thing or right into another; generally spoken of a case where one of the subjects is of less dignity or importance than the other. Here the less important ceases to have an independent existence is merger as per black’s Law Dictionary. The terms merger and amalgamation have not been defined in the Companies Act, 1956. Thought its definition had been given in the income tax act.
The provisions relating to merger and amalgamation are contained in sections 391 to 396A in Chapter V of Part VI of the Act.
Merger is a restructuring tool available to Indian conglomerates aiming to expand and diversify their businesses for various reasons whether it is to gain competitive advantage, reduce costs or unlock values. In commercial parlance, merger essentially means an arrangement whereby one or more existing companies merge their identity into another existing company or form a distinct new entity.
In practicality, mergers are not much different from that of amalgamations still they have different meanings under the companies act. The companies act 2013, has renewed the sense and applicability of laws regarding mergers but the sections 230 to 240 are yet to be notified. Until then, this court driven process will continue to be governed by Section 391-396A of the Companies Act, 1956 and the Companies (Court) Rules, 1959.
Cite this article:
Vishakha Sakharkar. The Concept of Merger In The Light of Judicial Rulings. Int. J. Ad. Social Sciences 2(2): April-June, 2014; Page 105-107.