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Allotment of shares on demerger

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(Querist)
24 December 2007 In a demerger scheme, the Resulting Companies allot shares to the shareholders of the Demerged Company. Whether there has to be a correlation between the value of the undertaking to be trasferred on demerger and the value of shares of the Resulting Companies? In other words, when the break up value of shares of the Resulting Company is less than its face value, should the Resulting Company allot more shares to the shareholders of the Demerged Company or vice versa?
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S SWAMINATHAN

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S SWAMINATHAN (Querist)
31 December 2007 The companies in which these undertakings are going to be demerged have been in existence for the last 10 years or more.
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CA. Yayati Tyagi

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CA. Yayati Tyagi (Expert)
27 May 2008 not necessary, may book the difference in reserves
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