Mergers and acquisitions refer to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. Merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase of their long term profitability. There are several different types of actions that a company can take when deciding to move forward using mergers and acquisitions.

Usually mergers occur in a consensual (occurring by mutual consent) setting where executives from the target company help those from the purchaser in a due diligence process to ensure that the deal is beneficial to both parties. Acquisitions can also happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market against the wishes of the target’s board.

The fusion or absorption of one thing or right into another; generally spoken of a case where one of the subjects is of less dignity or importance than the other. Here the less important ceases to have an independent existence.


The extinguishment of one contract by its absorption into another, and is largely a matter of intention of the parties.


The absorption of one company by another, latter retaining its own name and identity and acquiring assets, liabilities, franchises, and powers of former, and absorbed company ceasing to exist as separate business entity. It differs from a consolidation wherein all the corporations terminate their existence and become parties to a new one.



Merger of corporations which are neither competitors nor potential or actual customers or suppliers of each other. One in which there are no economic relationships between the acquiring and the acquired firm. A pure conglomerate merger occurs when the two merging firms operate in unrelated markets having no functional economic relationship.


Merger between business competitors, such as manufacturers of the same type products or distributors selling competing products in the same market area.


Union with corporate customer or supplier.


A number of states provide special rules for the merger of a subsidiary corporation into its parent where the parent owns substantially all of the shares of the subsidiary. This is known as a “short-form” merger. Short-form mergers under such special statutes may generally be effected by: (a) adoption of a resolution of merger by the parent corporation (b) mailing a copy of the plan of merger to all shareholders of record of the subsidiary, and (c) filing the executed articles of merger with the secretary of state and his issuance of a certificate of merger. This type of merger is less expensive and time consuming than the normal type merger.


A provision in a contract to the effect that the written terms may not be varied by prior or oral agreements because all such agreements have been merged into the written document.

A merger is popularly understood to be fusion of two companies. It means two enterprises by or under the control of a body corporate ceasing to be distinct enterprises.


A merger is a very important feature of modern capitalism. The history of modern big corporations is a clear testimony of the importance of mergers in the corporate world. They have played an important part in the growth of most of the leading corporations of the world. Statistics show that about two thirds of the large public corporations in the United States had a merger in their history and the top 200 corporations in the United States are reputed to own about half of the total corporate wealth of the U.S.A. Some of the giant corporations of the world have resulted from consolidation of smaller companies. Any assets of a body corporate which on a change in the control of the body corporate or any enterprise of it, are dealt with in the same way as assets appropriated to any such enterprise shall be treated as appropriated to that enterprise.


Companies Ordinance 1984 regulates the procedure for merger of two companies into one. Section 284 of the Companies Ordinance 1984 describes that a company could be merged / amalgamated into another company if:

  • Three fourths of the creditors or members sanctioned the same. An application for sanction for merger shall be given to the Court. The Court directs the Company to convene a meeting of creditors or class of creditors or of the member of the Company or class of members in such manner as the Court directs.
  • No Court sanctioned the merger unless the Court is satisfied that all material facts relating to the Company such as the latest financial position of the Company, the latest auditor’s report on the accounts of the company, the pendency of any investigation proceedings in relation to the Company and the like.
  • A certified copy of the order of the Court shall be filed with the registrar within thirty days otherwise the order would have no effect of merger / amalgamation.
  • A copy of such order along with the memorandum of the company issued after the order has been made shall be filed within thirty days with the registrar. A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made and filed aforesaid.
  • If a company make default in complying the requirements, the company and every officer of the company who is knowingly, willfully in default shall be liable to a fine which may extend to 500 rupees for each copy in respect of which default is made.


Object of merger is to achieve economy of scales and to carry on business more economically and efficiently, to streamline and maintain smooth and efficient management and corporate control, to cut unnecessary administrative, secretarial and other expenses, to attain the main objectives of both the petitioner-companies more feasibly, to avoid duplication of managerial and corporate process and to otherwise carry on business more conveniently and advantageously.


Section 282-L of the Companies Ordinance, 1984 prescribes the procedure for amalgamation of Non Banking Finance Companies:

  • A scheme containing the terms of the merger / amalgamation has been placed in draft before the share holders of each of the NBFC concerned separately;
  • The scheme shall be approved by a resolution passed by a majority in number representing two thirds in value of shareholders of each of the said NBFCs, present either in person or by proxy at a meeting called for the purpose;
  • Notice of every such meeting as is referred above shall be given to every shareholder of each of the NBFC concerned in accordance with the relevant articles of association, indicating the time, place and object of the meeting, and shall also be published at least once a week for three consecutive weeks in not less than two newspapers which circulate in the locality or localities where the registered offices of the NBFCs concerned are situated, one of such newspapers being in a language commonly understood in the locality or localities.
  • Any shareholder, who has voted against the scheme, of amalgamation at the meeting or has given notice in writing at or prior to the meeting to the NBFC concerned or the presiding officer of the meeting that he dissents from the scheme of the amalgamation, shall be entitled, in the event of the scheme being sanctioned by the Commission to claim from the NBFC concerned, in respect of the shares held by him in that NBFC, their value as determined by the Commission when sanctioning the scheme and such determination by the Commission as to the value of the shares to be paid to dissenting shareholder shall be final for all purposes.
  • If the scheme of amalgamation is approved by the requisite majority of shareholders in accordance with the provisions of this section, it shall be submitted to the Commission for sanction and shall, if sanctioned by the Commission by an order in writing passed in this behalf be binding on the NBFC’s concerned and also on all the shareholders thereof.
  • Where a scheme of merger / amalgamation is sanctioned by the Commission, the remaining or resulting entity shall transmit a copy of the order sanctioning the scheme to the registrar before whom the NBFC concerned have been registered, and the registrar shall, on receipt of any such order, strike off the name of the NBFC hereinafter in this section referred to as the amalgamated NBFC which by reason of the merger will cease to function.
  • On the sanctioning of scheme of amalgamation/ merger by the Commission, the property of the amalgamated NBFC shall, by virtue of the order of sanction, be transferred to and vest in, and the liabilities of the said NBFC shall, by virtue of the said order be transferred to and become the liabilities of the NBFC which under the scheme of amalgamation is to acquire the business of the amalgamated NBFC, subject in all cases to the terms of the order sanctioning the scheme.


  • By an order of the Central Government;
  • By purchase of assets;
  • By purchase of shares;
  • By Merger through a holding company;
  • By acquisitions of shares;
  • By way of a scheme in voluntary winding up;
  • By exchange of shares.


The act of becoming the owner of certain property; the act by which one acquires or procures the property in anything. Term refers especially to a material possession obtained by any means.

“Acquisition” is not a term of art and has, therefore, to be construed in its ordinary meaning, which covers in its ordinary meaning, in the context in which it is used, the acquiring of all kinds of rights or interests in land. It does not necessarily imply the acquiring of property rights though, when contrasting such acquisition with that of a lesser kind of rights such as requisition, acquisition is generally used to convey the obtaining of proprietary rights while requisition is confined to the mere taking of possession for a limited or unlimited period. But from this distinction it does not follow that they are entirely different concepts and cannot, therefore, be reasonably covered by the same expression. In decisions as well as statutes, the term acquisition has been used to include the temporary occupation.

“Acquisition” may be defined as a transaction or series of transactions whereby a person (individual, group of individuals or company) acquires control over the assets of a company, either directly by becoming the owner of those assets or indirectly by obtaining control of the management of the company. Where shares are closely held (held by a small number of persons), an acquisition will generally be effected by agreement with the holders of the whole of the share capital of the company being acquired. Where the shares are held by the public generally, the acquisition may be effected (a) by agreement between the acquirer and the controllers of the acquired company; (b) by purchases of shares on the stock exchange; (c) or by means of an acquisition bid.



Derivative acquisitions are those which are procured from others. Goods and chattels may change owners by act of law in the cases of forfeiture, succession, marriage, judgment, insolvency and intestacy; or by act of the parties, as by gift or sale.


Original acquisition is that by which a man secures a property in a shape which is not at the time he acquires it, and in its then existing condition, the property of any other individual. It may result from occupancy; accession; intellectual labor__ namely, for inventions, which are secured by patent rights; and for the authorship of books, maps, and charts, which is protected by copyrights.

An acquisition may result from the act of the party himself, or those who are in his power acting for him, as his children while minors.


According to Section 122 of the Companies Ordinance, 1984 where a company which has been registered in Pakistan acquires any property and creates a charge on that property then the property is required to be registered.


  • Approval: Approval of Board of Directors is required about agreement for acquisition of such property subject to mortgage / charge.
  • Registration of Charge: If any property is acquisitioned by the company which is already mortgaged / charge registered with the registrar.
  • The mortgage charge would be registered as if the company itself created the mortgage charge etc. The acquiring company becomes ‘mortgager’ and substitute existing mortgager and existing mortgagee becomes mortgagee of the acquiring company.
  • Period of 21 days meant for registration of mortgage charge shall be counted from the date of acquisition of the property.
  • The following Mortgage / Charge documents of acquisitioned property are filed with the registrar concerned for registration of the mortgage / charge etc:
    • Form 11 containing the particulars of the mortgage / charge etc.
    • Certified copies of the instruments creating the mortgage or charge.
    • Certified copies of the sale deed or other documents of acquiring assets/ property.
    • Affidavit regarding copies of the instruments being true. Charges etc.
    • Bank challan (deposited in relevant branch of HBL) of Rs. 5,000 being filing fee.

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