Acquisition & Internal Reconstruction
Generally when we talk about the acquisition of the business by a limited company, it refers to acquisition of non-corporate businesses like the Sole proprietorship or partnership form of business. It doesn’t mean that a company can not acquire a corporate form of business. But strictly speaking, the acquisition of business of a limited company by another limited company comes under the purview of “Amalgamation, Absorption and Reconstruction of Companies”.
Reconstruction is a process by which affairs of a company are reorganized by revaluation of assets, reassessment of liabilities and by writing off the losses already suffered by reducing the paid up value of shares and/or varying the rights attached to different classes of shares. It means reconstruction of a company’s financial structure. Reconstruction of company’s financial structure can take place either with or without the liquidation of the company.
Internal Reconstruction and acquisition of business both are the modes of corporate restructuring. A company may opt any of the modes of corporate restructuring keeping in mind all the necessary details.
Here is a quiz on Acquisition and internal reconstruction of business.