The amalgamation process was designed to be a simple and efficient corporate restructuring process for multiple companies to combine and continue as one company. However, since the statutory amalgamation regime was introduced in Singapore in 2005, there has been ambiguity as to the effect of an amalgamation. A key question is whether such an exercise constitutes a voluntary transfer of assets and obligations to the amalgamated company. This may raise certain practical problems: would the process trigger clauses in existing contracts which prohibit the assignment of rights? If so, is it necessary to obtain the consent of the counterparties to such contracts?
This note considers various interpretations of and approaches to this issue, and suggests practical tips when considering an amalgamation.
Amalgamation is a useful corporate restructuring tool that is intended to be a simple and efficient process for two or more companies to combine and continue as one company, which will then assume their combined assets, rights, privileges, liabilities and obligations. Unlike a traditional merger, where assets and the like must be formally assigned to the merged entity, an amalgamation is intended to allow these to be integrated seamlessly by operation of law. This has the benefit of significantly reducing costs and time.
Singapore: standard amalgamation and short-form amalgamation
Under Singapore law, there are two forms of amalgamation: standard amalgamation and short-form amalgamation. The key provisions are found in sections 215A to 215K of the Companies Act (Chapter 50) of Singapore (the CA), which are inspired by the Delaware Corporations Code and modelled on the New Zealand Law Commission Company Law Reform. The standard procedures of amalgamation described in sections 215B and 215C of the CA apply to companies generally, while companies in the same corporate group may amalgamate via the short-form procedure described in section 215D of the CA without the requirement of a formal amalgamation proposal.