A demerger from a listed company to an unlisted company can simultaneously function as an acquisition and a listing event, without the acquirer going through an IPO.
The structure is elegant but layered. SEBI’s Master Circular imposes four pre-conditions. The tax architecture is neutral across three parties, but two grandfathering questions (31 January 2018 for domestic shareholders, 1 April 2017 for treaty investors) remain unresolved. The IndAS treatment creates a deemed dividend in the transferor’s books, while the tax law provides neutrality. Stamp duty and CCI approvals add their own friction.
The attached carousel walks through the Commercial, Regulatory, and Tax framework of this structure.