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Demerger

Demerger

A demerger means a limited company's assets and liabilities are transferred to one or more other companies.

What is a demerger?

A demerger (Swedish: delning), sometimes called fission, means a limited company's assets and liabilities are transferred to one or more other companies. In a full demerger everything is transferred and the transferring company is dissolved without liquidation. In a partial demerger only part is transferred and the company continues. It is in effect the opposite of a merger.

 

Demergers and the share ledger

It follows a demerger plan, and shareholders normally receive demerger consideration as shares in the receiving company. They must then be entered in that company's share ledger.

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Related terms

Demerger plan

A demerger plan is the plan the board of directors draws up ahead of a demerger of a limited company.

Demerger consideration

Demerger consideration is the compensation that shareholders in a company being divided receive in a demerger.

Merger

A merger means two or more companies combine into one.

Spin-off

A spin-off means that part of a company, often a subsidiary, becomes an independent company of its own.