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A Guide to Amalgamation

A Guide to Amalgamation

There are several ways that a company in Singapore may eliminate its competition and scale its business for growth.

Amalgamation is one way that is often looked at as a strategic means for growth and development.

This guide will explore some of the reasons why amalgamation might take place in Singapore, and what the benefits and drawbacks might be!

What is Amalgamation in Singapore?

Amalgamation is when two or more companies merge together to form a new company. 

When this happens, these aspects of the amalgamating business are transferred to a single company:

  • Property
  • Rights
  • Privileges
  • Liabilities
  • Obligations

The new company in Singapore has the assets of both companies, and the shareholders of both companies become shareholders of the newly amalgamated company.

What is the Amalgamation Procedure in Singapore?

The amalgamation process in Singapore is regulated by the Companies Act. The process usually starts with the board of directors of each company proposing an amalgamation to their shareholders. 

If the shareholders approve, the companies will then apply to the Accounting and Corporate Regulatory Authority (ACRA) for approval.

ACRA will then review the application and may ask for additional information or hold a public hearing. If ACRA approves the amalgamation, the companies will merge and create a new company.

Related Read: Things to do Post Merger and Acquisitions Better Integration

Does an Amalgamation Require a Court Order?

In certain situations, an amalgamation may not require a court order. These requirements must be met:

  • The directors of each company involved in the procedure must declare solvency
  • The amalgamating companies must be solvent
  • The procedure must be approved by a special shareholder resolution of 75% minimally, depending on the constitution

What Are the Different Types of Amalgamations?

An amalgamation that does not need a court order is called a voluntary amalgamation. There are 2 types of voluntary amalgamations:

  1. Short-form amalgamation (intra-group restructurings/reorganisations)
  2. Long-form amalgamation

A short-form amalgamation procedure is only open to businesses within the same corporate group and where there are no minority interests. It is only allowed for these situations:

  • Amalgamation between a holding company and its 100%-owned subsidiaries
  • Amalgamation between 2 or more wholly-owned subsidiaries under the same corporation

On the other hand, a long-form amalgamation can be carried out by any company. It allows 2 firms to operate as 1, which may be the amalgamating company, or as a new business.

There are more precautions taken for a long-form amalgamation because of the need to safeguard minority interests.

Stamp Duty Relief for Amalgamating Companies

Amalgamating businesses may qualify for stamp duty relief during the asset transfer process on the instruments used. A pre-requisite of no significant change in the ownership of the companies except for the combination into common ownership must take place.

Both companies in the procedure must be wholly linked, whether directly or indirectly, to each other, for the asset consideration to be at the amalgamating company’s book value.

You can apply for the relief by submitting your application with the relevant supporting documents within these time frames:

  • Within 14 days of execution if the instrument is used in Singapore
  • Within 30 days of execution if it is used overseas

What Information is Needed to Complete an Amalgamation?

Businesses undergoing amalgamation must provide these details when they register on BizFile:

  1. The expected date of amalgamation
  2. Share capital details
  3. Copy of Constitution
  4. Registered business office address in Singapore
  5. List of officers and shareholders after the procedure
  6. The UEN number of the amalgamating companies
  7. Documents needed under Section 215E of the Companies Act

Related Read: Understanding the Amalgamation Process – How to Unite or Reconstructure Business Entities or Companies

What Are the Benefits of Amalgamation?

Why do companies amalgamate?

One advantage of amalgamation that encourages the process is that the new company can benefit from the expertise and products of both companies.

Instead of using only the knowledge and resources of one company, businesses can benefit from having more at their disposal.

The new company can also be more efficient and have a larger market share. There is less competition as it reduces the number of firms in the same industry.

Amalgamation can also help a company to enter into new markets or to expand its product range.

What Are Some Disadvantages of Amalgamation?

The disadvantages of amalgamation are that it can be costly and time-consuming, and there is a risk that the new company will not be able to integrate the two companies successfully.

There is also a risk that the shareholders of the original companies will not be happy with the new company’s share structure.

Engage InCorp to Secure a Successful Amalgamation

The amalgamation process may be complicated and taxing for companies that are unfamiliar with it. 

If you wish to amalgamate your firm with another in Singapore, let us manage the application and procedure for you and merge both companies quickly and successfully.

FAQs about Amalgamation in Singapore

  • In Singapore, amalgamation is a process that may be undertaken by companies in order to restructure their business operations.
  • An amalgamation is a combination of two or more companies into a new entity. This may be done for a number of reasons, such as to reduce costs, improve efficiency, or expand their operations.
  • There are short-form and long-form voluntary types of amalgamation procedures in Singapore.

About the Author

Alton Neo

Alton has deep technical expertise in the Singapore Financial Reporting Standards as well as hands-on experience in accounting for publicly-listed entities and growing enterprises in Singapore. Beyond that, Alton also provides expertise to fund managers and family offices on structuring.

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