Newsletter
SHARE ISSUANCE AND ACQUI-SITION DUE TO DEMERGER
When a company is demerged, the existing or newly incorporated acquiring company may is-sue shares to the demerged company or its shareholders, in accordance with the demerger plan. But according to a recent MOEA inter-pretation, it may choose only one of the above options, i.e. either all such shares must be issued to the demerged company, or they must all be issued to the demerged company shareholders. It is not permissible for part of the shares to be is-sued to the demerged company and part to its shareholders.
If the option chosen is that of issuing shares in the acquiring company to the shareholders of the demerged company, then according to the MOEA interpretation, the proportion in which they receive such shares must be pro rata to their existing shareholdings. The shares may not be allocated in any other proportion.