Forms of Voluntary Amalgamations
There are two forms of voluntary amalgamation procedures, the “short form” procedure and the procedure under sections 215B and 215C of the Act (often referred to in its abbreviated term, the “long form” procedure).
Short form amalgamations are available solely for companies within the same corporate group and where there are no minority interests. This procedure is only permitted between a holding company and one or more of its wholly-owned subsidiaries, or between two or more wholly-owned subsidiary companies of the same corporation.
Long form amalgamations are available to any company, and may allow two companies to continue as one company (which may be one of the amalgamating companies), or a new company. Due to the need to protect minority interests, more safeguards are built into the long form procedure.
Short Form Amalgamation
The short form amalgamation procedure is suited for intra-group restructurings and reorganisations. With the recent amendments to the Act, companies in a parent-subsidiary relationship may now amalgamate such that the subsidiary continues as the amalgamated company.
Broadly, the short form amalgamation procedure involves the following:
- Convening a general meeting of each amalgamating company to approve the amalgamation;
- Giving written notice of the proposed amalgamation to secured creditors, if any, of each amalgamating company, not less than 21 days before the date of the general meeting;
- Prior to the general meeting, the board of directors of each amalgamating company making statements and declarations of solvency, in compliance with the statutory requirements, in relation to the amalgamated company;
- Passing a special resolution to approve the amalgamation, which must contain certain prescribed terms, at the general meeting; and
- Lodging the relevant amalgamation documents and certain other compliance declarations with ACRA, and paying the prescribed fee.
Long Form Amalgamation
As noted above, long form amalgamation procedure is available to companies even if they do not belong to the same group, but contains additional protections to require enhanced disclosure. The following summarises the additional steps, over and above those for a short form amalgamation, that would need to be undertaken:
- An amalgamation proposal must be prepared and must set out, among other things, the necessary prescribed information relating to the amalgamated company and how the amalgamation is to be completed;
- In addition to solvency statements and declarations, the board of directors of each amalgamating company must pass a resolution that the proposed amalgamation is in the best interest of that amalgamating company;
- The statements and declarations of solvency by the board of directors must be given both in relation to each amalgamating company as well as the amalgamated company;
- Certain prescribed documents and information pertaining to the amalgamation must be provided to the secured creditors, if any, and every member of each amalgamating company, not less than 21 days before the general meeting to approve the amalgamation proposal; and
- A notice of the proposed amalgamation must also be published, not less than 21 days before the general meeting, in at least one daily English newspaper circulating generally in Singapore, and which must advertise the availability of the amalgamation proposal for inspection by any member or creditor of an amalgamating company, and such person’s entitlement to be supplied a copy thereof.