Brief Definition
The term “with no transfer consideration” refers to a situation in a business transaction or reorganization where no monetary payment or other compensation is exchanged between the parties involved.
Further Explanation
The term “with no transfer consideration” refers to a situation in a business transaction or reorganization where no monetary payment or other compensation is exchanged between the parties involved. This often occurs in specific types of business combinations, such as mergers or internal reorganizations, where the transfer of assets, liabilities, or ownership does not involve a direct exchange of cash or other forms of payment.
Example:
Internal Reorganization: Company X has two subsidiaries, Subsidiary A and Subsidiary B. For strategic reasons, Company X decides to transfer certain assets from Subsidiary A to Subsidiary B. No cash or other consideration is exchanged between the subsidiaries. This is done to streamline operations and align assets more efficiently within the corporate structure.
Statutory Merger: Company Y decides to merge its wholly-owned subsidiary, Subsidiary C, into the parent company. Since Company Y already owns all the shares of Subsidiary C, no cash or other consideration is exchanged. The merger simplifies the corporate structure and reduces administrative costs.