Merger of a firm into public ltd. co.

Hello Friends,

Can any body guide me that whether a partnership firm can be merged or amalgamated in to a public limited company. If yes then what is the procedure ? The procedure under Companies Act, treatment under Income Tax and other laws. Any checklist , guidance material or something like that.

I will be thankful to my friends.
With Warm Regards
BE/ LLM in Corporate Laws

Mergers involve transfer of shares. Since a firm does not have shares, a firm cannot be technically "merged" with a public lmited copmany. However, it can be "sold-off" to the public limited company or more technically speaking the public limited can 'buy-out" the firm. The procedure will be as follows :-

1. Evaluation of the Firm's assets and liabilities.

2. Passing of Special Resolution by the Public Limited Company to buy-out the firm.

3. Approval by the Board of Directors of the Public Limited Company.

4. Referring the proposal to High Court for Orders.

5. Once the High Court issues the orders, the Firm will stand "merged" with the public limited company.

For taxation purpose, the date of merger is very important and should be very clearly spelt out in the agreement of "buy-out'. Generally the date of High Court Orders is taken as the date of merger.

Regading Income Tax, if the Firm had accumulated losses, the public limited company can take tax advantage towards absorbing the losses and unabsorbed depreciation. If the firm was in profit and had cash surplus, capital gains tax will be applicable towards the same.  


Dear Sir,

Thanks very much.  This is indeed really helpful. Can u guide me that whether  in the said matter required the Compulsory approval of High Court or not.??????? I m little bit confused about it.


Further, if u have any guidance material, relevant circular, checklist then please send me the same on  I will be thankful to u.



BE/ LLM in Corporate Laws

The mergers and amalgamations of companies are dealt with under Section 391 to 396 of The Company's Act,1956. Kinndly refer these sections.

As the Firm is not covered under The Copmany's Act, these proivisions will not be applicable to a Firm.


Company do not required a permission of High Court as it is not a merger as per sec 391 to 396. 




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