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caCompany A having 3 shareholders say: J (50% shares), SS (1% Shares) & ZZ (49%). Now ZZ want to sell her shares then first preference will go to J & SS respectively. In case both shareholders (J & SS) refused to buy her 49% shares then she will go for its sale to external party. In this case, another Company B having 3 shareholders in head of J (20% shares), SS (60% shares) and SD (20%) wanted to purchase 49% shares of ZZ of Company A. However, J & SS are also existing shareholders of Company B. Now questions are:-
1. Who will assess shares value of ZZ (49%) of Company A for sale & its criteria? 2. Can Company B purchase (as whole) of 49% of ZZ (Company A)? If yes then company B will be owner of 49% shares or individually shares holder of Company B. Also suggest its implication on each shareholders of both companies. 3. If 2 point is applicable that is also called as merger then who will take decision on part of Company A (50% shareholder of Company A or 100 % shareholder of Company B). 4. If 2 point is applicable then what will happened to profit of Company A (about 50% shares profit which Company B owns) 5. Also suggest best solution by reviewing all 4 points if ZZ (49% of Company A) want to sell her shares and advantage goes to either Company B as whole or Shareholder of Company B. Pls note J is managing director of Company A and SS is managing director of Company B.
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W Network
caCompany A Company B
J(50%), SS(1%), ZZ(49%) -100% J(20%), SS(60%), SD(20%)-100%
J(50%), SS(1%), Company B-49% J(20%),SS(60%), SD(20%)
Company B wanted to purchase Shares (49%) share of Company A.
- Any Independent Valuer can be appointed by Company A who will assess Share value of Z for sale and it can be calculated by any of the following method:
1.comparing valuation ratios,
2.Discounted Cash Flow analysis (DCF),
3.Internal Rate of Return (IRR),
4.Net Asset Value (NAV) Method,
5.Earning Capacity Method and many others.
The most common method and easiest to implement is to compare valuation ratios for the private company versus ratios of a comparable public company.
- Yes Company B can purchase share of ZZ (49%) and with this Company A will be Associate Company of Company B as it is holding only 49% of shares .
Implication on Company A : the shareholders are changed –The Shareholders of Company A after Sale of 49% share will be J(50%), SS(1%), Company B-49% and it is only acquiring of shares and the Company has not loosen its identity. Its a separate company running in the eyes of Law.
Company B Shareholding remain unchanged: J (20%),SS(60%), SD(20%)- Shareholders remain same, so no change in identity of Company.
- The purchase of Companies Shares leads to merger of Company A with Company B only when Company A looses its identity and absorbed in the business of Company B. The decision of Company A will be taken by both the Shareholders of Company A as share holders J & SS are having 51% of Shares and Company B is having 49 % of Shares. If Company B had more than 50% of shares than decision of Company A would have been taken by Company B.
- The Profit of the Company will be divided between Companies Shareholding i.e. Company A having (51 %) and Company B(49%) so profit will be accordingly as per Share exchange ratio as decided in the merger scheme.
- After considering all the points the selling of Shares by Company A Shareholder ZZ (49%) benefitted to Company B as a whole as Company B itself become shareholder of A.
'Get a Wazzeer' to have all the required documents drafted by an experienced Lawyer seamlessly in just few days.
almost 3 years ago
View answer
Company A having 3 shareholders say: J (50% shares), SS (1% Shares) & ZZ (49%). Now ZZ want to sell her shares then first preference will go to J & SS respectively. In case both shareholders (J & SS) refused to buy her 49% shares then she will go for its sale to external party. In this case, another Company B having 3 shareholders in head of J (20% shares), SS (60% shares) and SD (20%) wanted to purchase 49% shares of ZZ of Company A. However, J & SS are also existing shareholders of Company B. Now questions are:-
1. Who will assess shares value of ZZ (49%) of Company A for sale & its criteria? 2. Can Company B purchase (as whole) of 49% of ZZ (Company A)? If yes then company B will be owner of 49% shares or individually shares holder of Company B. Also suggest its implication on each shareholders of both companies. 3. If 2 point is applicable that is also called as merger then who will take decision on part of Company A (50% shareholder of Company A or 100 % shareholder of Company B). 4. If 2 point is applicable then what will happened to profit of Company A (about 50% shares profit which Company B owns) 5. Also suggest best solution by reviewing all 4 points if ZZ (49% of Company A) want to sell her shares and advantage goes to either Company B as whole or Shareholder of Company B. Pls note J is managing director of Company A and SS is managing director of Company B.
-
W Network
caCompany A Company B
J(50%), SS(1%), ZZ(49%) -100% J(20%), SS(60%), SD(20%)-100%
J(50%), SS(1%), Company B-49% J(20%),SS(60%), SD(20%)
Company B wanted to purchase Shares (49%) share of Company A.
- Any Independent Valuer can be appointed by Company A who will assess Share value of Z for sale and it can be calculated by any of the following method:
1.comparing valuation ratios,
2.Discounted Cash Flow analysis (DCF),
3.Internal Rate of Return (IRR),
4.Net Asset Value (NAV) Method,
5.Earning Capacity Method and many others.
The most common method and easiest to implement is to compare valuation ratios for the private company versus ratios of a comparable public company.
- Yes Company B can purchase share of ZZ (49%) and with this Company A will be Associate Company of Company B as it is holding only 49% of shares .
Implication on Company A : the shareholders are changed –The Shareholders of Company A after Sale of 49% share will be J(50%), SS(1%), Company B-49% and it is only acquiring of shares and the Company has not loosen its identity. Its a separate company running in the eyes of Law.
Company B Shareholding remain unchanged: J (20%),SS(60%), SD(20%)- Shareholders remain same, so no change in identity of Company.
- The purchase of Companies Shares leads to merger of Company A with Company B only when Company A looses its identity and absorbed in the business of Company B. The decision of Company A will be taken by both the Shareholders of Company A as share holders J & SS are having 51% of Shares and Company B is having 49 % of Shares. If Company B had more than 50% of shares than decision of Company A would have been taken by Company B.
- The Profit of the Company will be divided between Companies Shareholding i.e. Company A having (51 %) and Company B(49%) so profit will be accordingly as per Share exchange ratio as decided in the merger scheme.
- After considering all the points the selling of Shares by Company A Shareholder ZZ (49%) benefitted to Company B as a whole as Company B itself become shareholder of A.
'Get a Wazzeer' to have all the required documents drafted by an experienced Lawyer seamlessly in just few days.
almost 3 years ago
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