MCQ

PSU Mergers MCQ - Practice Questions with Answers

Solve 2 PSU Mergers questions for RAS/RPSC preparation.

Practice questions

Q1With reference to the proposed merger of PFC and REC, consider the following statements:\n1. REC Limited is the transferor company and Power Finance Corporation Limited (PFC) is the transferee company.\n2. The share exchange ratio provides for issuing 100 equity shares of PFC for every 88 equity shares of REC.\nWhich of the statements given above is/are correct?

A 1 only

B 2 only

C Both 1 and 2

D Neither 1 nor 2

Explanation

Statement 1 is correct: REC (the transferor company) is being merged into PFC (the transferee company). Statement 2 is incorrect: the ratio is 88 equity shares of PFC (Rs 10 each) for every 100 equity shares of REC (Rs 10 each), not the reverse. Hence only statement 1 is correct.

Q2With reference to the proposed merger of REC into PFC, consider the following statements:\n1. The merged entity will have a combined loan book of over Rs 1.1 lakh crore.\n2. The merged entity is required to continue to qualify as a Government Company under the Companies Act, 2013, with the Government of India retaining majority voting rights and control.\nWhich of the statements given above is/are correct?

A 1 only

B 2 only

C Both 1 and 2

D Neither 1 nor 2

Explanation

Statement 1 is incorrect: the merger creates a financing entity with a combined loan book of over Rs 11 lakh crore, not Rs 1.1 lakh crore. Statement 2 is correct: the merged entity must continue to qualify as a Government Company under the Companies Act, 2013, and the Government of India is to retain majority voting rights and control (directly or indirectly). Hence only statement 2 is correct.

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