CORPORATE RESTRUCTURING - RECONSTRUCTION & REVERSE MERGER

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....t proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies the Tribunal may, either by the order sanctioning the compromise or arrangeme....

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....with a financially weak company. The main reason for this type of reverse merger is the tax savings under the Income- Tax, 1961. Section 72A of the Income Tax Act ensures the tax relief, which becomes attractive for such reverse mergers, since the healthy and profitable company can take advantage of the carry forward losses/of other company. The healthy units lose its name and surviving sick compa....