Can a Public Limited Company in India buy a Private Limited Company and the taken over Private Limited Company continue to run as Private Limited Company ?
Kindly enlighten about this and what will be the repercussions on the private limited company so purchased ?
14 November 2011
Can take...You are silent on the way of takeover..there are many ways like merger,subsidiary,management taken over etc. And in there cases private company assumed as public company and all provisions applies as to public company
A new public limited company takes over a Private limited company which has a strong brand value , after merger in the new public limited company the private company is given 125% of the net worth of the private company .25% gain . After 2 years the shares of public limited company are listed and public issue is brought . It is then agreed that private company will do independent business and merger is cancelled and shares issued to private limited company are bought back at par . Any legal hitch in this deal can you point out ?
A new public limited company takes over a Private limited company which has a strong brand value , after merger in the new public limited company the private company is given 125% of the net worth of the private company .25% gain . After 2 years the shares of public limited company are listed and public issue is brought . It is then agreed that private company will do independent business and merger is cancelled and shares issued to private limited company are bought back at par . Any legal hitch in this deal can you point out ?
15 November 2011
Do you think big business decisions could be taken from such advises ! Please consult a professional personally. Anyways you said its new public co and after 2 years it will bring issue ! It has to bring now only. Technically you are wrong.
15 November 2011
can u please ENLIGHTEn us, under which section has the PUBLIC co bought its own shares from the PVT limited co. Is it a practical situation being faced or an invented theory question?
15 November 2011
Practical situation described below :
A pvt. ltd. company has a very good brand in ready made Gold jewelry market .A newly formed public limited company takes over the private limited company under the Agreement the salient points described as under :
Price consideration is
Assets minus liabilities plus 25% of that , so it is net worth plus 25% for goodwill . The public limited company will promote its own brand of ready made jewelry which will be made by the pvt. Ltd. company and their show rooms will serve as outlets for the new brand of jewelry too.
The pvt ltd. Company has passed on their assets and liabilities to the new public limited company and it is treated as private placement and shares of the new company are issued at the agreed premium .
After 10 years the Agreement will be renewed on fresh terms and if it is decided to discontinue then the present Directors of the public limited company will buy back the shares from directors of pvt. Ltd. company at the same price it has been issued .
Any legal hitch in this under the Companies Act ??
CAclubindia
