There are two (2) forms of voluntary amalgamation procedures under the Companies Act 1967 (Companies Act), the procedure under section 215D of the Companies Act (Short Form Amalgamation) and the procedure under sections 215B and 215C of the Companies Act.
The Short Form Amalgamation is available solely for companies within the same corporate group and where there are no minority interests, and is hence suited for intra-group restructurings and reorganisations. This procedure is only permitted between a holding company and one (1) or more of its wholly owned subsidiaries, or between two (2) or more wholly owned subsidiary companies of the same company. The resultant company will be either the wholly owned subsidiary or the holding company.
The key steps for a Short Form Amalgamation are set out below:
In terms of restrictions, there is an avenue for a member or creditor of an amalgamating company to apply to the Singapore High Court (the High Court) to object to the amalgamation before the effective date of the amalgamation. If the High Court is satisfied that giving effect to an Amalgamation Proposal would unfairly prejudice such member or creditor, it may give the following orders:
After the amalgamation, the Companies Act sets out the effects of the amalgamation, which take effect on the date shown in the Notice of Amalgamation, and include the following:
In addition to the statutory effects of the amalgamation, it is usual for all of the contracts that the companies being amalgamated may have entered into with third party suppliers and service providers, or any contracts relating to any leasehold interest over property, to first be novated to the surviving amalgamated company.
Another of the usual steps with an amalgamation would be to ensure that the employees of such amalgamating companies, that will not exist after the completion of the amalgamation, are transferred to the surviving amalgamated company.
When a holding company decides to do away with its subsidiaries as part of the restructuring or reorganisation of its group (and not pursue amalgamation), an application to strike such subsidiaries off the register maintained by ACRA under the Companies Act (the Register), is another viable option.
In accordance with section 344A of the Companies Act, ACRA may, on the application by a company, strike the company’s name off the Register on such grounds, and subject to such conditions, as may be prescribed.
ACRA will exercise its powers to strike a company off the Register, upon the company’s application, only if the following criteria (the Striking-off Criteria) are satisfied:
In addition, the following documents must also be prepared for a striking-off application:
Any interested person, such as IRAS, an unpaid creditor, a director who has not made the statutory declaration or a shareholder of the company who did not approve the striking-off, can submit an objection against the striking-off application. If the company is unable to resolve the objection within two (2) months, the striking-off application will lapse and the company can only submit a new application after the objection has been cleared.
Amalgamation and striking-off applications are both efficient and effective tools to achieve corporate restructuring. As mentioned above, each of them presents unique requirements and implications which should be carefully considered before employing them, and businesses should therefore seek legal advice when considering the use of amalgamation and/or striking-off as a corporate restructuring tool.
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