100.Reconstruction, Amalgamation and Merger

The term “Reconstruction” means building again. In the context of companies, it implies reorganization of the company with alteration or modification of rights of members or creditors or both. It involves carrying on the business in some other form.

Amalgamation is the process of blending of two or more companies into one company. When two companies merge into a third company, it is amalgamation. That is blending of two companies into a third company. Here the identity of merged companies will lose.

Merger is nothing but amalgamation. When a weak or loss making company is amalgamated with a strong company, it is termed as Merger. Both merger and amalgamation have identical procedural formalities. Simply, it is the absorption of one company by another.

Takeover is different from amalgamation. In takeover, control over the assets of the concerned company is passes to the acquirer. But in amalgamation, share holding in the combined new company is spread over the members of the all companies involved in the process.