Types Of Demerger In India: A Comparative Analysis With US And UK Models
- IJLLR Journal
- Apr 22, 2025
- 1 min read
Sriyanka Mohapatra, Birla School of Law, Birla Global University, Bhubaneswar
Ashmit Rungta, Birla School of Law, Birla Global University, Bhubaneswar
ABSTRACT
In India, demergers have emerged as a key corporate restructuring technique that helps companies increase productivity, maximize shareholder value, and adhere to changing legal requirements. Demergers give organizations the strategic freedom to reorganize operations, separate non-core businesses, and optimize resource allocation in a dynamic economic environment characterized by globalization, digital change, and growing investor engagement. The several forms of demergers that are permitted by Indian corporate law—such as spin-offs, split-ups, split-offs, slump sales, divestment/divesture equity carve-outs—are explored in this research. With a focus on the regulatory procedures, tax structures in each jurisdiction, it provides a comparative legal and structural analysis of the models implemented in the US and the UK.
The research also explores important legal provisions, significant court rulings, tax ramifications, and the wider effects of demergers on creditors, shareholders, and corporate governance. It also highlights recent trends including cross-border structuring, ESG-driven demergers, and the growing influence of technology in business decision-making. Through case studies and comparative observations, the research highlights inadequacies in the Indian framework and offers reforms to bring domestic practices in line with global best practices.
Keywords: Demergers, Corporate Restructuring, India, US, UK, Tax Implications, Shareholders, Corporate Governance.
