Corporate Law

Reorganization basically means any activity wherein the proprietary form of an organization is changed by way of merger, acquisition, spoff, etc., with a view to introducing greater efficiency and profitability.

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Schemes are a common form of merger and acquisition transaction whereby the acquiring business offers to purchase the shares of the target company from the owners of that target company, often at a premium. That must be approved by a majority of the shareholders in the target company and also the court.

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On the contrary, a scheme of demerger would involve a transaction whereby a business separates its operations into entities, either by way of spin-offs to existing shareholders or by sale to third-party buyers. The primary purpose of a demerger is usually much clearer and helps in laying emphasis on the organization achieving better operational efficiencies and financial performance.

 

 

Some of those deals amount to huge legal and financial stakes. Companies that may involve themselves in one type of restructuring or another are encouraged to engage legal and financial consultants who could give professional advice on issues related to such strategic moves.