A holding company, when it is a public company, any subsidery company thereafter of the holding company shall be deemed to be public company. But can 2 public companies incorporate a private company?
T. Kalaiselvan, Advocate (Advocate) 25 August 2023
A Public company can also get converted into a private company by filing Form INC-27 subject to passing the special resolution and approval of the competent authority.
A company merger is when two companies combine to form a new company. Companies merge to expand their market share, diversify products, reduce risk and competition and increase profits.
A merger happens when two companies combine to form a single entity. Public companies often merge with the declared goal of increasing shareholder value, by gaining market share or from entering new business segments. Unlike an acquisition, a merger can result in a brand new entity formed from the two merging firms.
Dr. J C Vashista (Advocate and Legal Consultant) 26 August 2023
Your query pertain to "merger" of two public companies or creating a "holding" / "subsidiary" company or converting a "public" company in to a "private" company", be clear ?
Yes, two public companies can incorporate a private company. There is no law that prohibits two public companies from incorporating a private company. For example, Google, an LLC is a subsidiary company of Alphabet (public).
Section 7 of the Companies Act, provides the procedure for incorporation.
However, there are some considerations that the two public companies should take into account before incorporating a private company. These considerations include:
If the two public companies carefully consider these considerations, they can incorporate a private company that meets their needs.
Here are some additional things to keep in mind:
Overall, there are both pros and cons to incorporating a private company. The two public companies should carefully consider their needs before making a decision.