Question

1.
Two companies A Ltd. and B Ltd. go into
liquidation to form a new company C Ltd. It is a
case of :
(a) Absorption
(b) External reconstruction
(C) Amalgamation
(d) None of the above​

Answer 1

Answer:

c) amalgamation is the correct answer

Answer 2

The given case is of Amalgamation.

• Amalgamation is a process through which two companies combine their individual assets and liabilities to form a single company. Example: Indian origin Maruti Motors and Japan-based Suzuki amalgamated and formed a new company called Maruti Suzuki
• In External Reconstruction, a company that has been financial crisis is bought by another company. Example Years ago, Vodafone bought all the shares of Hutch.
• In absorption, a company takes control of another company to grow its business.