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Introduction to Dissolution

When a new co...

Question

When a new company is formed to take over the business of an existing company it is known as _____________ .

A

Amalgmation

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B

Absorption

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C

Internal Reconstruction

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D

External Reconstruction

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Solution

The correct option is B External Reconstruction
When a new company is formed to take over the existing company's business it is external reconstruction while when the company reorganizes itself and reworks on its capital and other liabilities and other assets it refers to internal reconstruction.No company is dissolved in case of internal reconstruction.

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