Transactions regarding Demerger (of Companies)
Demerger of a company or a cooperative takes place when all or any part of the assets of the company or cooperative (the “Transferring Company”) is transferred to another company or cooperative (the “Acquiring Company”). Title of the assets of the Transferring Company is transferred as such to the Acquiring Company and the shareholders of the Transferring Company receive shareholding rights in the Acquiring Company in return.
Demerger is divided into two as “Full Demerger” and “Partial Demerger”.
(1-) Full Demerger: in case of a full demerger, all of the assets of the Transferring Company are divided into sections and transferred to the Acquiring Company and the shareholders of the Transferring Company acquire shares and shareholding rights in the Acquiring Company. Upon the completion of the demerger process, the Transferring Company will be de-registered from the records of the Trade Registry and shall cease to exist.
(2-) Partial Demerger: In case of a partial demerger, only one or more parts of the assets of the Transferring Company are transferred to the Acquiring Company. Unlike a full demerger, the Transferring Company continues to exist after a partial demerger. Depending on the intention of the related parties to the partial demerger agreement, either the shareholders of the Transferring Company or the Transferring Company itself shall acquire shares and shareholding rights in the Acquiring Company in return for the transferred assets. In the latter case, the Acquiring Company becomes a subsidiary of the Transferring Company since the transfer of assets shall be deemed a “capital in kind” subscription by the Transferring Company to a capital increase of the Acquiring Company.
In a symmetric demerger, the shareholding percentages of the shareholders of the Transferring Company remain the same in the Acquiring Company.
In an asymmetric demerger, the shareholders of the Transferring Company end up holding different shareholding percentages in the Acquiring Company.
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