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Demerger versus divestiture: a demerger restructures the existing legal entity, while a divestiture:
AAlways issues new shares without affecting ownership
BSells a division for cash or securities to a third party
CNecessarily liquidates the entity to its creditors
DMandatorily requires court approval before SEBI
Answer & Solution
Correct answer: B. Sells a division for cash or securities to a third party
1. Identify what the question asks: this concept maps to divestiture (§7).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (B).
_Source: ICAI BoS CA Final Paper 2, Ch 14 "Mergers Acquisitions and Corporate Restructuring"_
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