Demerger and intangible assets

Shyam Lal Naik (Querist) 31 August 2009 This query is : Resolved
Sir,

Now a days big business houses, including Government, outsource their activities, mainly to reputed and experienced contractors. The experience is commonly known as credential in commercial parlance.

If a company is demerged into two company, whether both the reasulting companies can use the credential in agreed ratio.

Kindly opine.

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R.R. KRISHNAA (Expert) 31 August 2009
Yes it is possible. The two resulting companies can share the credential in agreed ratio, provided it is done to the approval of the government, since the original contract stands in the name of the one company and the government.

Shyam Lal Naik (Querist) 31 August 2009
Sir,

Your answer is relevant so far the ongoing contracts are concerned.

What about the qualifying requirement for future tenders.

R.R. KRISHNAA (Expert) 31 August 2009
But for future tenders the each company has to apply seperately as now they are two different entities.

But for the purpose of business and to acquire tenders easily, both the companies without losing their individual identity can float (form a new company) i.e., Joint venture and they can participate in the tenders. It is a best way to show experince and reputation in the field of contract without losing their individual identities. By this way both the companies can share the credential in agreed ratio.