Rules of Merger & Demerger

_________________________________________
1. These rules are called Rules of Merger & Demerger amongst the Firms registered
with The Institute of Chartered Accountants of India.
2. Concet of Merger & Demerger!
(i) The Partnership Act has not prescribed merger & demerger of partnerships. In
the corporate world, merger and demerger have become universal practices for
securing survival, growth, expansion and globaliation of enterprise and achieving
multitude of ob!ectives. "erger is the fusion of two or more existing companies. #n
the other hand, demerger signifies a movement in the compan$ !ust opposite to
merger. %&emerger' is also used to describe spinning off of an (underta)ing* of a
+orporate entit$. The concept of %"erger', %&emerger' & %Ac,uisition' are arising out
of the %Arrangement' under -ections ./01./2 of the +ompanies Act, 0/34. "erger
and &emerger are natural corollar$ of globaliation.
(ii) To incorporate the spirit of +orporate 5orld and to imbibe the consolidation
creed, the +ouncil used the term 6merger' and 6amalgamation' of +A firms. The
+ouncil in its 0/7
th
"eeting held from 83
th
to 89
th
:ebruar$, 0/// and in 88.
rd
"eeting
held from 8
nd
to 3
th
:ebruar$, 8;;8 considered the -eniorit$ and "ergers of the firm
and implications of the decisions.
(iii) In order to have an orderl$ and sustainable growth of the +A firms, it is desirable
that the coming together of the firms begins with networ)ing and then matures to
mergers. <etwor)ing will enable the firms to develop wor)ing relationships with
each other. =owever, it is not to suggest that there cannot be mergers without
networ)ing.
(iv) The mergers should be effected to develop core competencies and to render
professional services of a larger range spread over bigger geographical area. A
merged big entit$ will alwa$s be superior to a networ) arrangement.
". Merger
(i) To effectuate merger, a merger agreement in Form #$% (enclosed) is to be filed
with the Institute within .; da$s from the date of the agreement. The re1constitution
agreement>partnership deed shall be filed with the ?egistrar of :irms.
(ii) @pon the merger of the firms, the Institute will freee the names of the merging
firms and shall not allot the same names to an$ other firm.
&. Demerger
(i) The merger has to precede the demerger. The merger agreement itself shall contain
the terms and conditions for demerger. Therefore no concurrence>acceptance is
re,uired from the continuing partners. The merger agreement shall stipulate that in
case 93A or more of the continuing partners of one of the erstwhile firm(s) are willing
to demerge then the$ can do so after giving due notice in Form #F% (enclosed) to the
other partners and to the Institute.
(ii) In case 93A or more of the continuing partners of one of the erstwhile merging firm
have demerged after giving due notice to the other partners, then in such case, the
merger shall come to an end and if the remaining erstwhile merging firms>partners of
the erstwhile merged firm decided to continue, then the$ should enter into a fresh
"erger>Partnership Agreement.
(iii) The &emerged :irm is entitled to practice in its old trade name, which existed at the
time of merger.
(iv) The +onstitution +ertificate issued b$ the Institute to the demerged firm shall state
the original date of establishment, the date of its merger and the date of the
demerger. :or the purpose of computing the seniorit$ of the firm, the total period
will be rec)oned from the original date of establishment.
(v) The demerger can be demanded within a period of 3 $ears from the date of merger.
Form `E
F'RMAT 'F M$R($R A(R$$M$)T
T*$ I)+TIT,T$ 'F C*ART$R$D ACC',)TA)T+ 'F I)DIA
-+ee Rule " of Rules of Merger & Demerger amongst the firms registered with The Institute of
Chartered Accountants of India.
5e, (0)BBBB (8) BBBB (.) BBBBBB partners of (0) ">s. A & +o. (8) ">s. C &
+o. & (.) BBBBBBBB execute this "erger Agreement on this DDDD da$ of DDDDDD, at
DDDDDDDDDDDE
0. ">s A & +o., a Partnership>Proprietorship firm of +hartered Accountants
having its registered =ead #ffice at DDDDDDDDDD, dul$ registered with the Institute of
+hartered Accountants of India vide :irm <o. DDDDDDDDD in DDDDDDDDD region (which
expression shall include its successors, heirs and assigns).
The date of establishment, name of the partners, their membership nos, are as followsE1
(i) &ate of establishment
(ii) <ame of the Partners "embership <o.
8. ">s C & +o., a Partnership>Proprietorship firm of +hartered Accountants
having its registered =ead #ffice at DDDDDDDDDDD, dul$ registered with the Institute of
+hartered Accountants of India vide :irm <o. DDDDDDDDDD in DDDDDDD region (which
expression shall include its successors, heirs and assigns).
The date of establishment, name of the partners, their membership nos, are as follows E1
(i) &ate of establishment
(ii) <ame of the Partners "embership <o.
.. BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
)ow/ therefore/ in consideration of mutual romise herein made and the
consideration hereunder e0ressed/ the arties hereto mutuall1 co2enant and agree as
follows!
0. That the name of the merged firm will be DDDDDDDDDDDDDDDD and the date of
establishment of the merged firm is the date of establishment of the oldest>older firm i.e.
DDDDDDDD.
8. That this merger will come into force w.e.f. DDDDDDDDDD 8;FF, whereafter, the
merging firm i.e. ">s A & +o., and ">s C & +o. cease to exist and a separate partnership
deed has been executed on DDDDDD amongst the partners of the merged firm.
.. That the following persons are the partners of the merged firmE
0. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
8. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
.. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
2. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
3. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
4. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
9. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
7. "r. DDDDDDDDDDDDDDDDDDD "embership <o. DDDDDDDD
5e, all the partners of the merged firm BBBBBBBBBBBBBBB understand
that this merger has the following conse,uences in pursuance to the decision of the
+ouncil of the InstituteE 1
0. That the name of the erstwhile merging firms will be
froen b$ the Institute.
8. And in case 93A or more of the continuing partners of one or more erstwhile merging firm(s)
are willing to demerge, the$ ma$ demerge after giving due notice and will be entitled to the
following benefits E
(i) The$ shall be entitled to the total seniorit$ ac,uired i.e. their earlier pre1merger seniorit$
and the $ears during which the$ were in merged firm.
(ii) The$ are entitled to their old firm's name.
Provided in case, 93A is a fraction, then the same shall be rounded off to the next number.
.. That the date of establishment of the new demerged firm shall be the date of demerger.
2. That to effectuate such demerger, no concurrence>acceptance is re,uired from the other
continuing partners of the merged firm. The partners of such demerged firm shall execute a
partnership deed. The merged firm as well as the demerged firm shall submit fresh :orm 07
as prescribed under the +hartered Accountants ?egulations, 0/77 to the Institute within the
prescribed period.
3. In case of 93A or more of the continuing partners of one of the erstwhile merging firm have
demerged after giving due notice to the other partners, then in such case, the merger shall
come to an end and if the remaining erstwhile merging firms>partners of the erstwhile
merged firm decided to continue, then the$ should enter into a fresh "erger>Partnership
Agreement and shall submit fresh :orm 07 as prescribed under the +hartered Accountants
?egulations, 0/77 to the Institute within the prescribed period.
4. That the demerger in the manner hereinbefore mentioned can be demanded onl$ within a
period of 3 $ears from the date of merger.
I< 5IT<G-- 5=G?G#:, the Partners of the "erged firm ">sBBBBBBBBBB.
hereto set their hands on this agreement in the presence of the witnesses.
5IT<G--G- E
0.
8.
(i) DDDDDDDDDDDDDDDDDDD
(ii) DDDDDDDDDDDDDDDDDDD
(iii) DDDDDDDDDDDDDDDDDDD
(iv) DDDDDDDDDDDDDDDDDDD
(v) DDDDDDDDDDDDDDDDDDD
(vi) DDDDDDDDDDDDDDDDDDD
(vii) DDDDDDDDDDDDDDDDDDD
(viii) DDDDDDDDDDDDDDDDDDD
Partners of ">sBBBBBBB
:orm %:'
)'TIC$ F'R D$M$R($R
T*$ I)+TIT,T$ 'F C*ART$R$D ACC',)TA)T+ 'F I)DIA
-+ee Rule &3i4 of Rules of Merger and Demerger amongst the firms registered with The Institute of
Chartered Accountants of India.
0. 5e the following persons
<ame(s) "embership <o.(s)
DDDDDDDDDDDDD DDDDDDDDDDDDDDD
DDDDDDDDDDDDD DDDDDDDDDDDDDDD
being partners of ">s DDDDDDDDDDD which merged with the firm ">s DDDDDDDDas per
merger agreement dated DDDDDDDD willing to demerge with effect from DDDD
8. 5e are the partners of the erstwhile "erging firms, ">s DDDDDDDDDDD merged with ">s.
DDDDDDDDDDDD & constitute the merged firm DDDDDDDDDD with effect from DDDDDDD.
The "erger Agreement dated DDDDDDDD and :orm 07 were filed before the Institute on
DDDDDDDDDD
.. 5e constitute 93A or DDDD A of the continuing partners of the erstwhile firm ">s.
DDDDDDDDD
2. This demerger is within a period of 3 $ears from the date of merger.
3. 5e desire that our pre1merger name be allotted to us.
DDDDDDDDDDDDDDDDDDDDDDDD
PlaceE DDDDDDDDDDDDDDDDDDDDDDDD
&ateE DDDDDDDDDDDDDDDDDDDDDDDD
-ignature of all the Partners of the Grstwhile :irm ">s.
DDDDDDDDwilling to demerge.