Reconstructions, Mergers And Winding Up:

(a) Reconstructions, mergers and takeovers are not defined terms. A reconstruction may be an alternative of the structure of a group of companies or an alteration of the capital structure of a single company.

(b) A merger (also called an amalgamation) is a transaction whereby two or more companies are combined in some way in united ownership.  The simplest method is a takeover bid whereby Company A acquires the issued share capital of Company B so that they form a single group in which A is the holding company and B is the subsidiary.  A more complex type of merger entails the transfer of a business (and the assets employed in it) from one company to another.  If the acquiring company (in either a take-over bid for shares or a purchase of assets) allots its own shares as consideration for the acquisition the members of the company whose business or share capital is acquired will become additional members of the acquiring company.

(c) A company may absorb a minority shareholding in its partly-owned subsidiary in exchange for cash or shares.

(d) Finally a company may seek to alter the rights of its creditors, eg. by variation of the rights of debenture holders, by mutual agreement.

(e) In these transactions it is first necessary to select the only available (or if more than one) the most convenient method to effect the proposed change.  The advantages and disadvantages of each method are explained below in connection with the method itself.  The essential elements of every method are that if a decisive majority of members or creditors can be obtained by the correct procedure the minority (if any) who dissent will be bound by the majority decision.  But in each case the minority is given safeguards or rights of objection to the court to balance the element of compulsion.  Although a minority cannot frustrate the change by their opposition they are entitled to a fair deal.