Amalgamation is the legal process by which the property, liabilities, and undertakings of two or more companies merge and be succeeded by a single surviving company. Each amalgamating companies will cease to exist as separate entities, and their shareholders will become the shareholders of the amalgamated company on the effective date.
The board must issue a statement to confirm that the assets of the amalgamating company are not subject to any floating charge or a floating charge exists. And the chargee has consented to the amalgamation proposal, and to verify the solvency of the amalgamating company.
Approval of the amalgamation by shareholders via a special resolution
Once a special resolution has been passed, statutory returns are required to be filed with the companies’ registry. Unless there are objections from creditors to the amalgamation proposal before a prescribed date, a certificate of amalgamation will normally be issued by the companies’ registry.
The amalgamation is effective from the date specified in the certificate of amalgamation.
If you are planning for amalgamation, it is imperative that you conduct a thorough due diligence of any existing contracts or commercial arrangements executed by an amalgamating company as the amalgamation may trigger events of default.
Acclime Hong Kong has considerable experience in handling the legal, as well as the operational aspects of amalgamations, including the assessment of operational and legal risks relating to the restructure.