Demerger of Fixed Assets (Land) which is not related to existing product

[Ashok Chopra]

Respected Forum,

Me is a Private Limited Company having Land in the name of the company at various places which is not related to the product being manufactured by us.  Directors of the company are four brothers.  Can we incorporate new company and DEMERGE the said FIXED ASSETS (LAND) from the existing company by reducing Capital  proportionatly.

Please advice me Is it a correct procedure or there any other correct and legal  procedure as we are in the process of introducing PUBLIC ISSUE and we want that Land which is in the name of Company and not related with the product being manufactured  be DEMERGE from existing company.

regards

 

[YAGAY and SUN]

Any merger or demerger, spinoff, etc are subject to, submittig information to Commissioner of Compition of India.  Please discuss this matter with you consultant.

AI Summary

Demerger of land assets may trigger pre-transaction competition review and requires professional advisory before capital restructuring. Demerger of land assets not used in the company's business is proposed via incorporation of a new company and proportional reduction of capital to transfer the immovable property prior to a public issue. The advisory reply warns that mergers, demergers or spinoffs can trigger competition law notification or review obligations and recommends consulting a professional advisor to ensure compliance with pre-transaction filing and procedural requirements.