Law Firms In Dhaka Bangladesh

Law Firms In Dhaka, Bangladesh.

“Amalgamation occurs when two or more companies are joined to form a third entity or one is absorbed into or blended with another.”-explain & illustrate.

1. Introduction:

Amalgamation is form of business combination. It is used as some other meaning like merger, absorption, consolidation, acquisition etc.[1] It occurs When a company wants to expand their business in terms of long term profitability under a mutual setting by two parties.[2]

According to the Halsbury’s Law of England:

“Amalgamation is a blending of two or more existing undertaking into one undertaking, the shareholders of each blending company becoming substantially the shareholders in the company which is to carry on the blended undertaking. There may be amalgamtion either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company.

Strictly ‘amalgamtion does, not, it seem, cover in the mere acquisition by a company of the sahre capital of other companies which remain in existence and continue their undertakings, but the context to which the term is used may show that it is intended to include such an acquisition.”

Amalgamtion can also be defined as[3] “ Amalgamation takes place when two or more comapanies combine into one company, the shareholders in the amalgamting companies becoming substantially the shareholders in the amalgamted company.”

In more common way, Amalgamtion would mean the two business entities joining together to make totally new business entity or to allow one business entity to survive absorbing the other one. Amalgamation or merger is also a method of reconstruction. In amalgamation, two or more companies are fused into one by merger or by one taking over the other. [4] When two companies are merged and are so joined as to form third company or one is absorbed into other or blended with another, the amalgamating company loses its identity. There may be amalgamation either by transfer of two or more undertakings to a new company or by the transfer of one or more undertakings to an existing company. An amalgamation may be defined as an arrangement whereby the assets of the two companies which has as its share holders all, or substantially all the share holders of the two companies [5]

It may be observed that there may be amalgamation either by the transfer of one or more undertakings to a new company or by the transfer of one or more undertaking to an existing company.

2. How Amalgamation Happens:

Usually amalgamation happens through 2 ways.

ü      Through absorption.

ü      Through consolidation.

Absorption:[6] A combination of two or more companies into an existing company is known as ‘absorption’. In absorption all companies expect one go into liquidation and lose their separate identities.  E.g. Absorption of GMG Airlines Ltd. by Beximco Group.

Consolidation:[7] A consolidation is a combination of two or more companies into a new company. In this form of merge, all the existing companies, which combine, go into a new company. In this form of merger, all the existing companies, which combine, go into liquidation and form a new company with a different entity. The entity of the existing company is lost and their assets and liabilities are taking over by the new corporation or company. The assets of old concern are sold to a new concern and their management and control also passes into the hands of the new there are two companies called A ltd. and B Ltd. and they merge together to form a new company called AB Ltd. or C Ltd. it is a case of consolidation . The term consolidation is also sometimes used as amalgamation.

3. Classification of amalgamation:

From the business perspective when two or more companies merge together or amalgamate another to form a new one; on that basis we can classify amalgamation into the five kinds.


ü       Horizontal merger – Two companies that are in direct competition and share similar product lines and markets, join together it is known as a horizontal merger. The idea behind this type of merger is to avoid competition between the units. (e.g.: two manufacturers’ of same type of cloth, two transport companies operating on the same route-the merger in all these cases will be horizontal merger.

ü      Vertical merger – Vertical mergers occur when two firms, each working at different stages in the production of the same good, combine. Vertical mergers involve firms in a buyer-seller relationship — a manufacturer merging with a supplier of component products, or a manufacturer merging with a distributor of its products. A vertical merger can harm competition by making it difficult for competitors to gain access to an important component product or to an important channel of distribution. This is called a “vertical foreclosure” or “bottleneck” problem. Example: Prudential’s acquisition of Bache & Company.

4. Procedure of AMALGAMATION[8]

In the judgment of Stamp L.J. in the case of Crane Fruehauf Limited v IRC [1975] 1 All ER 429 he indicated that an amalgamation can be achieved in the following ways:

A company may need to expand its business to take over all sorts of business advantages or sometimes need to pursue its creditors or shareholders interest. For this purposes it necessary to settle a new structure or amalgamate with another company.[9] Sections 391 to 396A of the Companies Act lay down the procedure for such re- – organization and amalgamation. The procedure is summarized below.

I. Schemes for Arrangement


The expression “Arrangement” includes a re-organization of the share-capital of the Company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both these methods.

A compromise or arrangement may be proposed

(a) Between the company and its creditors or any class of them; or

(b) Between a company and its members or any class of them. ,

Upon such a proposal being made, the company, or any ‘ creditor, or any member, or the liquidator (if the company is in the process of being wound up) may apply to the court for an order directing the holding of a meeting of the members or the creditors concerned.


II. Amalgamation through the Court

A scheme of compromise or arrangement may involve the amalgamation of one company with another by the transfer of the whole or part of any company to another. In such cases the scheme must be approved by holders of three-fourths in value of the shares concerned and sanctioned by the court. While sanctioning the scheme the court can facilitate the amalgamation by passing order for any of the following purpose:

(a) The transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company;

(b) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which under the compromise or arrangement are to be

Allotted or appropriated by that company to or for any person;

(c) The continuation by or against the transferee company (it any proceedings pending by or against any transferor company ;

(d) The dissolution, without winding up, of any transferor company;

(e) The provision to be made for any person who, within such time and in such manner as the Court directs, dissents from the compromise or arrangement; and

(f) Such incidental, consequential and supplemental matters n+ we necessary to secure that the reconstruction or amalgamation i shall be fully and effectively carried out.

III. Compulsory purchase of the shares of dissenting shareholders. (Sec. 395)

Scheme for – ‘take over’ of shares: Where a scheme or contract involving; the transfer of shares of one company to another has been approved by the holders of not less than nine­ tenths in value of the shares involved within four months of the date of making the offer, the transferee company may, at any time within two months after the expiry of the said four months, give notice to any dissenting shareholders that it desires to acquire his share. The offer must be sent with full and detailed information.

Upon such notice being given, the transferee company becomes entitled and bound to acquire the shares, within one month of the date of notice, on the same terms as those on which the shares of the approving members are being acquired under the scheme.

Through the procedure provided by Section 395, it is possible to carry through a scheme of amalgamation, without the assistance of the court.


IV. Amalgamation by Order of Central Government (Sec. 396)

Where the Central Government is satisfied that it is essential in the public interest that two or more companies should amalgamate, it may, by order notified in the official Gazette, provide for the amalgamation of those companies into a single company with such constitution; with such property, power, rights, interests, authorities and privileges; and with such liabilities and obligations; as may be specified in the order.

The order’ of the Central Government may contain such consequential, incidental and supplemental provisions as may be necessary to give effect to the amalgamation.

Books and papers of a company amalgamated with or acquired by another company under sections 391 to 396 shall not be disposed of without the prior permission of the Central Government. They may be examined for evidence of any offence.-Sec. 396A.


Mergers and acquisitions have gained importance in recent times. All most in every sector we can see there is a lot of amalgamation & acquisition takes place through the world. Which will eventually helps to business firms to get more business & competitive advantage over its competitors in terms of more quality products, reliable & faster services and generates more profits for the companies. Thus this amalgamation process also helps to bankrupted companies to start a new era of business through restructuring & rebranding. Therefore, this may lead to come out from economic downturn & employee turnovers.

Bibliography Law Firms In Dhaka Bangladesh.

1.       Amalgamations. (n.d.). Retrieved 04 01, 2011, from Taxireland:

2.       Anthony F. Buono, J. L. (1989). The Human Side of Mergers and Acquisitions: Managing Collisions Between. Washington D.C: Jossey-Bass Inc.

3.       ARGUMENTS FOR AND AGAINST MERGERS AND ACQUISITIONS. (n.d.). Retrieved 04 02, 2011, from Globusz® Publishing :

4.       Chavan, S. (2010, November 11). Merger’s & Amalgamation’s From Law Firms In Dhaka Bangladesh Legal Point of View. Retrieved 03 31, 2011, from Managementparadise:

5.       Chetty, P. (2009, June 16). Mergers and Acquisition. Retrieved 04 01, 2011, from Projectguru:

6.       Choudhury, S. R. (2011, January 05). Mergers In India. Retrieved 04 02, 2011, from awyersclubindia:

7.       External expansion or Business combination and it’s types. (n.d.). Retrieved 04 02, 2011, from Mbaknowledgebase:

8.       Mergers & Acquisitions. (n.d.). Retrieved 03 29, 2011, from Leagalarticlesdirectory:

9.       Misra, N. (2008, May 23). Retrieved 04 03, 2011, from

10.   The Companies Act, Cap308. (n.d.). Retrieved 03 30, 2011, from Corporate Affairs and Intellectual Property Office:

11.   Upon amalgamation rights of amalgamating company devolve upon amalgamated company. (2011, Jan 26). Retrieved 04 01, 2011, from taxguru:

12.   Verena Kusstatscher, C. L. (2005). Managing emotions in mergers and acquisitions. Glos: Edward Elgar Publishing Ltd.

13.  Siddharthan, N. (1969). Conglomerates and Multinationals in India-Astudy of Investment and Profits. New Delhi.

14.  Sings, A. (1971). Takeovers. Cambridge University Press.

15.  Younth, G. &. (1962). The Law of Income Tax,Sur Tax and Profit Tax. London.

16.  Younth, G. (1962). Mergers and Acquisitions,Planning and Action. London.

17.  U.S, N. (1986,May2). Takeovers and Mergers .

18.  Yorkston, R. a. (1962). Company Law. Australia.

19.  Swarup, J. (1964). The Companies Act,1956. Lucknow.

20.  Stopford, J. M. (1972). Managing the Multinational Enterprise. New York: Basic Books Inc.

21.  Steiner, P. O. (1975). Merger:Motive,Effects,Policies,An Arbor. university of Michigan.

22.  Santhanam, R. (1978). A guide to Amalgamations of Companies With Special References to Tax Planning. New delhi: Sultan Chand & Sons.

23.  Reid, S. ,. (1968). Mergers,Managers and the Economy. New York: McGraw-Hill Book Co.

24.  Blank, W. a. (1979). Takeovers & Mergers. London.

25.  Merger Mania. (1992). Business World , 62-69.

26.  Navani. (1986). Takeovers and Mergers. Economic Times.

27.  Nelson, R. (1959). Merger Movement In America Industry1895-1956. Princeton, Princeton University Press,.

28.  Nelson, R. Mergers Movement in America .

29.   Arun Kumar Sen, J. K. (2000). Commercial Law and Industrial Law. New Delhi.

30.   Bhole, L. M. (2009). Financial Institutions & Markets. New Delhi: Tata-mcgraw Hill.

31.   Periasamy, P. (2009). Financial Management. New Delhi: The McGraw Hill Comapnies.

32.   Ray, K. G. (2010). Mergers and Acquisitions. New delhi: PHi Learning Private Ltd.

33.   Millar, R. (2007). Doing Business with India. London: GMB Publishing Ltd.

34.   Miller, G. P. (1998). Bank mergers & acquisitions. MA: Kluwer Academic Publisher.

35.   Günter K. Stahl, M. E. (2005). Mergers and acquisitions: managing culture and human resources. Stanford university Press.

36.   Dash, A. P. (2009). Mergers And Acquisitions. New Delhi: Tata_Mcgraw Hill.

[1] There is some disagreement on the precise meaning of various terms relating to the forms of business combinations, viz; merger, amalgamation, absorption, consolidation, acquisition, takeover, etc.

[2]Merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase of their long term profitability. Usually mergers occur in a consensual (occurring by mutual consent) setting

[3] See, PeriaSamy, Financial Management, 2E, Pg-11.10, Para- 3

[4] See, Saraswati Industrial Syndicate v. CIT, Haryana (1991) 70 Comp Cases 184

[5] See, United Bank of India v. United India Credit & Development Co.Ltd. (1977) 47 Comp cases 689 (Cal)

[6] See, A.K Sen, Commercial Law & Business Law, 26 ed., Ch-4

[7] A Company may find it necessary to settle or compromise; with its creditors or with particular groups of shareholders. For this purpose it may be necessary to recognize its structure or to amalgamate with another Company.



For: The Lawyers & Jurists


M.L.Hotel Tower Ltd,208,Shahid Syed Nazrul Islam Sarani,


Bijoy Nagar, Dhaka-1000.


Country code+ Ph No.


Ph:0088-02-9571389; 0088-02-9513408,


0088-02-9564329, 0088-02-9564398


Direct cell with country code:


Local Code :