A limited company wants to take over a private limited company .
What is the procedure involved in this?
pls guide.
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 23 January 2012
Take over of business can be done in two ways acquring shares or by acquring business
since the takeover company is a pvt ltd company AS-14 is applicable liquidate that pvt ltd co and bring the net assets in acquired companys book record the purchase consideration difference between the two is recorded either as goodwill or capital reserve
anand
(Administrative officer)
(185 Points)
Replied 25 January 2012
Thanks Sivaram.
Does purchasing a business include purchasing company's assets as well as company's share ? (In other words what is difference between purchasing shares of a company & purchasing business of acompany?
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 25 January 2012
purchasing shares means sellers shares are taken back by purchasing company and new shares of purchasing co will be issued but if a business is taken over the net assets of selling company will be taken over and the purchase consideration is discharged by any means like equity shares .pref shares ,debentures by purchasing company cash will be paid for fraction shares of selling co by purchasing co
In case of acquiring of shares selling company remains as it is and it is not liquidated hence in such a case Holding Subsidary relationship comes into existence
so to sum up in case of take over by shares no liquidation takes place but in case of business is taken over selling company is liquidated
Master GSTR-9 and 9C with India's First Unique Live Course with Live practical training
CAclubindia
