Amalgamation
Practical Law Canada Glossary 6-564-2126 (Approx. 2 pages)
Glossary
Amalgamation
A corporate transaction where two or more corporations (the amalgamating corporations) combine to form one amalgamated corporation (Amalco). Amalco, by operation of law, acquires all assets, rights and contracts of each amalgamating corporation and becomes automatically liable for their debts, liabilities, and other obligations. The amalgamating corporations do not disappear, and no new corporation is created (R. v. Black & Decker Manufacturing Co., 1974 CarswellOnt 258 (S.C.C.)). Rather, the amalgamating corporations fuse together as Amalco. An amalgamation is governed by the incorporating jurisdiction of the amalgamating corporations.
There are two types of amalgamations in Canada:
- Short form. Amalgamating corporations may proceed by short-form amalgamation if one corporation is wholly owned by the other (a short-form vertical amalgamation) or if the amalgamating corporations are all wholly owned subsidiaries of the same holding body corporate (a short-form horizontal amalgamation). A short-form amalgamation is completed by the directors of each amalgamating corporation approving the amalgamation and by filing articles of amalgamation in the governing jurisdiction. Shareholders of the amalgamating corporations do not need to approve the amalgamation.
- Long form. Amalgamating corporations that do not meet the criteria for a short-form amalgamation proceed by long-form amalgamation. To complete the amalgamation, the shareholders of each amalgamating corporation must approve the amalgamation, and the amalgamating corporations must enter into an amalgamation agreement. The amalgamating corporations then file articles of amalgamation along with the amalgamation agreement (attached as a schedule to the articles under the OBCA) to obtain a certificate of amalgamation.
For more information, see Corporate Organization and Maintenance Toolkit and Practice Note, Amalgamations in M&A Transactions.
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