Amalgamation refers to the union of two or more incorporated companies. The resultant amalgamated company assumes the assets and liabilities of each company that has combined. The amalgamation process whereby the rights, assets, liabilities, privileges and obligations of the amalgamating companies are transferred to and vested in the amalgamated company, is effected by the operation of law.
Such amalgamations operated by law does not require the sanction of the courts. The amalgamated company could either be a new one or an ongoing one, whereby one or more companies will combine into an existing company, and continue as an ongoing entity. The shareholders of the amalgamating company will become the shareholders of the amalgamated company. The Companies Act governs the amalgamation process of two or more incorporated companies. (sections 215a-h).
Types of Amalgamation
There are two schemes of amalgamation:
- Standard form Amalgamation: In this scheme, any two or more companies may combine and continue as one entity.
- Short form Amalgamation: This scheme is shorter but this is applicable for the amalgamation between a company and one or more of its wholly-owned subsidiaries; or two or more wholly owned subsidiaries of the same parent.
In both the schemes, the amalgamating companies can choose between forming a new company after amalgamation or have one of the amalgamating company as the amalgamated company.
The process of Amalgamation
Several procedural steps need to be completed by the amalgamating companies for the successful consolidation.
Read the procedural steps and the full version of this article at Singapore Tax & Accounting Services website.
