Reconstruction :

Reorganisation or arrangement is said to have taken place only when one company is involved. Amalgamation, on the other hand, is of two or more companies. The term “reconstruction” includes reorganisation, arrangement, amalgamation, etc., and thus is a term of wide import.

A reconstruction is commonly said to have taken place when a company resolves to wind up its business and it is proposed to form a new company, with only the old shareholders as its members to take over its undertaking, the rights of shareholders in the old company being satisfied by their being allotted shares in the new company. In that case, the old company ceases to exist in point of law, and its assets are transferred to the new company. It would be, nonetheless, a reconstruction even if all the assets might not pass to the company, or all the shareholders of the transferor company might not be shareholders in the transferee company, or all the liabilities of the transferor company might not be taken over by the transferee company. A reconstruction, in such a case, would imply that substantially the same persons would carry on the same business substantially. [Re South African Supply and Cold Storage Co. (1904) 2 Ch. 286].