Startup & Business
Demerger — Meaning
Transfer of a business undertaking to another company that issues shares to the original shareholders.
What is Demerger?
In a demerger, an undertaking of one company moves to a resulting company under an NCLT-approved scheme, and the resulting company issues shares to the demerged company's shareholders. If the Section 2(19AA) conditions are met — all assets and liabilities of the undertaking transfer at book value, holders of at least 75% of shares become shareholders of the resulting company, and the undertaking continues as a going concern — it is tax-neutral for the company and shareholders.
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Related terms
More Startup & Business terms
MCA (Ministry of Corporate Affairs)
India's government ministry administering the Companies Act and registering companies through the MCA portal.
ROC (Registrar of Companies)
Government authority under MCA that registers companies and LLPs and maintains statutory records.
DIN (Director Identification Number)
Unique 8-digit number assigned to every director of a company in India.
DSC (Digital Signature Certificate)
Electronic signature issued by certifying authorities — required for filing company/LLP documents with MCA.
Private Limited Company
A separate legal entity incorporated under the Companies Act 2013 — most common startup structure.
