Question

If a new company Chandrika (New) Ltd. is formed to take over the business of an existing company Charu Ltd., it is a case of ________________.

• A. External Reconstruction
• B. Internal Reconstruction
• C. Absorption
• D. Amalgamation

Answer 1

The correct option is A External Reconstruction

External reconstruction takes place when an existing company goes into liquidation for the express purpose of selling its assets and liabilities to a newly formed company which is generally owned and named alike. It is similar to amalgamation though not exactly the same.