Merger is only one of the several garbs in which corporate restructuring can take place.

It seems
prudent to begin an overview of the anti-competitive nature of mergers with an effort to determine
the specific definition of the term ‘merger’ and the manner in which it differs from other categories
of restructuring activities. A simplistic explanation of merger would usually mean a deal which results
into the assets of two different corporate entities vesting in one entity.1 The precise legal
nomenclature used in the Indian Companies Act, 19562 is ‘amalgamation’, wherein two or more
companies are joined into one by way of merger or by one of them being taken over by the other.3
Amalgamation can occur either by the two or more corporate entities being transferred so as to lead
to the creation of a new company, or by the one or more entities being transferred to an already
existing company. As such, amalgamation does not encompass within its scope a situation wherein
the share capital of one company is merely being acquired by another, leaving the former to carry on
with its business. Yet the different contextual usage of this nomenclature in relation to transactions
may indicate that even such an acquisition is covered well within its scope.4 Based on the underlying
objectives and modalities involved, further categorization of the various modes of corporate
restructuring can also be made, like Leveraged Buy-Outs and Management Buy-Outs, for instance.
Merger may also happen as an integral feature of ‘reconstruction’5 of two or more companies.
Takeover, on the other hand, despite its distinctiveness from merger as per the proportion of
acquisition, retention of control and the modalities involved, is often perceived as included within a
part of the wider expression ‘mergers and acquisitions’ or ‘M&A’. However, it should be noted that
certain types of restructuring, like ‘slump sale’6 and ‘divestiture’,7 are not covered by the term
‘merger’8, though they may come under the purview of ‘acquisition’. Thus there has never been any
As per Section 390(b) of the Companies Act, 1956, amalgamation will also include a reorganization of the share
capital of the company by the consolidation of shares of different classes, or by the division of shares into shares
of different classes, or by both those methods. In K.P. Jain v. S. K. Gupta [1978] 48 Comp Cas 774 (Delhi), the

1
As per Section 390(b) of the Companies Act, 1956, amalgamation will also include a reorganization of the share
capital of the company by the consolidation of shares of different classes, or by the division of shares into shares
of different classes, or by both those methods. In K.P. Jain v. S. K. Gupta [1978] 48 Comp Cas 774 (Delhi), the
court had said that when business goes to pieces and “things fall apart; the centre cannot hold” and “an
arrangement is proposed to revive, reconstruct and regenerate the company and to save it from being wound
up, if possible,” that is when an amalgamation becomes necessary. A more limited perspective of the
arrangement would signify a type of compromise that reasonable people acquainted with the subject-matter
under consideration can gauge as being favourable to the interests of all the parties involved in the transaction.
This view has also been upheld in In re Katni Cement & Industrial Company Limited [1937] 7 Comp Cas 348 (Bom).
2
Although this legislation has been recently amended by the Companies Act, 2013 very recently, yet most of the
provisions discussed in this paper in the context of mergers remain mostly unchanged and hence this paper
focuses for the most part on the 1956 Act itself.
3
In this context, it may prove useful to note the distinction between ‘acquisition’ and ‘take over’. The former is
a rather generalized term meaning buying of one company by another, whereas the latter generally refers to
the specialized form of acquisition of a public company that has its shares listed on a stock exchange.
4
Saraswati Industrial Syndicate Limited v. CIT, AIR 1991 SC 70.
5
A corporate reconstruction involves a transfer of corporate assets to another new body corporate, with the
existing members of the first company being given ownership of the shares of the second company and the first
company’s unpaid debenture holders being given ownership of the debentures of the second company, but with
the original undertaking being continued and preserved though in a modified fashion. SeeCIT v. Ganga Sugar
Corporation,[1973] 92 ITR 173 (Del.).
6
Sale of the whole of the stock is a slump transaction, and in a slump sale, the business must be transferred as a
whole. SeePremier Automobiles Ltd. v. ITO,[2003] 264 ITR 193 (Bom). The statutory definition of slump sale can
be found in Section 2(42C) of the Income Tax Act, 1961.
7
This is a transaction by which a company sells a portion of its assets to another company. Such asset reduction
is usually done pursuant to attaining certain financial goals.
8
Another such term is ‘demerger’, defined in Section 2(19AA) of Income Tax Act, 1961 to mean splitting up of a
company into two/more units, transfer of an undertaking of a company to another company.
court had said that when business goes to pieces and “things fall apart; the centre cannot hold” and “an
arrangement is proposed to revive, reconstruct and regenerate the company and to save it from being wound
up, if possible,” that is when an amalgamation becomes necessary. A more limited perspective of the
arrangement would signify a type of compromise that reasonable people acquainted with the subject-matter
under consideration can gauge as being favourable to the interests of all the parties involved in the transaction.
This view has also been upheld in In re Katni Cement & Industrial Company Limited [1937] 7 Comp Cas 348 (Bom).

Although this legislation has been recently amended by the Companies Act, 2013 very recently, yet most of the
provisions discussed in this paper in the context of mergers remain mostly unchanged and hence this paper
focuses for the most part on the 1956 Act itself.
In this context, it may prove useful to note the distinction between ‘acquisition’ and ‘take over’. The former is
a rather generalized term meaning buying of one company by another, whereas the latter generally refers to
the specialized form of acquisition of a public company that has its shares listed on a stock exchange.
Saraswati Industrial Syndicate Limited v. CIT, AIR 1991 SC 70.
A corporate reconstruction involves a transfer of corporate assets to another new body corporate, with the
existing members of the first company being given ownership of the shares of the second company and the first
company’s unpaid debenture holders being given ownership of the debentures of the second company, but with
the original undertaking being continued and preserved though in a modified fashion. SeeCIT v. Ganga Sugar
Corporation,[1973] 92 ITR 173 (Del.).
Sale of the whole of the stock is a slump transaction, and in a slump sale, the business must be transferred as a
whole. SeePremier Automobiles Ltd. v. ITO,[2003] 264 ITR 193 (Bom). The statutory definition of slump sale can
be found in Section 2(42C) of the Income Tax Act, 1961.
This is a transaction by which a company sells a portion of its assets to another company. Such asset reduction
is usually done pursuant to attaining certain financial goals.
Another such term is ‘demerger’, defined in Section 2(19AA) of Income Tax Act, 1961 to mean splitting up of a
company into two/more units, transfer of an undertaking of a company to another company.