A) Madaari Securities Ltd, a broking and underwriting firm wishes to merge with Kabaali Capital Ltd

A) Madaari Securities Ltd, a broking and underwriting firm wishes to merge with Kabaali Capital Ltd., an investment bank to become Kamaali Capital Securities Ltd. Will this merger be allowed?

(a) Yes     (b) No

B)  In financing the merger of two companies through purchase consideration method, the transferee comes up with a scheme of issuing deep discount bonds to the shareholders of the transferor company. This has the following implication -

(a) The scheme is not compliant with an amalgamation in the nature of purchase.

(b) The transferee is not permitted to do so since the shareholders of the transferor have to be settled in cash.

(c) Since this is a buyback of shares, it has to be financed only in cash.

(d) The deep discount bonds have to be valued at not less than the original issue price of the shares.

(e) The swap ratio of bonds to shares shall not be less than the issued capital of the transferor company.

(f) The issue price of the bonds shall be equal to the purchase consideration.