Mergers, Acquisitions and Corporate Restructuring

CHAPTER 2 FORMS OF CORPORATE RESTRUCTURING

Test Bank

Multiple Choice Questions

1. Creation of an altogether new company owning assets, liabilities, loans and business of two or more companies, both /all of which cease to exist is called (a) (b) (c) (d) 2. Merger Consolidation Acquisition Amalgamation

The combination of all assets, liabilities, loans and business of two (or more) companies such that one of them survives, is called (a) (b) (c) (d) Acquisition Amalgamation Merger Joint venture

3.

Demerger can take place in many forms (a) (b) (c) (d) Spin-off Split-up Split-off Spin-up

Find the right choice (i) (ii) (iii) Only a Both a & b Both b & d

Mergers, Acquisitions and Corporate Restructuring

(iv) 4.

a, b and c

An attempt or a process by which a company or an individual or a group of individuals acquires control over another company, is called (a) (b) (c) (d) Merger Amalgamation Acquisition Consolidation

5.

A company can reduce its capital (a) (b) (c) (d) By extinguishing or reducing the liability in respect of share capital not paid up By writing off or cancelling the capital which is lost By paying off or returning excess capital that is not required by the company All of the above

6.

Crave-out is a hybrid of (a) (b) (c) (d) Divestiture and spin-off Divestiture and split-up Divestiture and split-off Divestiture and spin-up

7.

Merger is primarily a strategy of (a) (b) (c) (d) Inorganic growth Organic growth Strategic growth None of the above

8.

Amalgamation includes (a) (b) (c) (d) Merger only Consolidation only Both merger and consolidation None of the above

9.

Control over a company (called target company) can be acquired (a) by acquiring, i.e., purchasing a substantial percentage of the voting capital of the target company (b) by acquiring voting rights of the target company through a power of attorney or through a proxy voting arrangement (c) by acquiring control over an investment or holding company, whether listed or unlisted, that in turn holds controlling interest in the target company (d) All of the above

Mergers, Acquisitions and Corporate Restructuring

10.

Absolute control would mean an unfettered right to take any decision (a) (b) (c) (d) 75 per cent acquisition of equity shares of a company 80 per cent acquisition of equity shares of a company 90 per cent acquisition of equity shares of a company 100 per cent acquisition of equity shares of a company

11. The threshold limit or trigger limit for open offer in India is: (a) (b) (c) (d) 5 per cent 10 per cent 15 per cent 25 per cent

12. An out and out sale of all or substantially all the assets of the company or any of its business undertakings/divisions, usually for cash (or for a combination of cash and debt) and not against equity shares is known as (a) (b) (c) (d) Merger Amalgamation Divestiture Consolidation

13. A hybrid of divestiture and spin-off is known as a) b) c) d) Joint Venture Carve out Amalgamation None of the above

14. In case of creeping acquisition, promoters (anyone holding above 15 per cent of the companys voting capital) can acquire: (a) Only 25 per cent of the companys voting capital in a financial year without being required to make an open offer (b) Only 15 per cent of the companys voting capital in a financial year without being required to make an open offer (c) Only 10 per cent of the companys voting capital in a financial year without being required to make an open offer (d) Only 5 per cent of the companys voting capital in a financial year without being required to make an open offer

Answers

Mergers, Acquisitions and Corporate Restructuring

1. b 2. c 3. d 4. c 5. d 6. a 7. a 8. c 9. d 10. d 11. c 12. c 13. b 14. d