Amalgamatoin

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04 November 2011 help me solving amalgamatoin question relating to advance question

CS Bijoy

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07 November 2011 An amalgamation is the means of merging the assets and liabilities of two or more amalgamating companies, with one continuing as the amalgamated company, and the other or others being removed from the register.

The Companies Act 1993 deals with these in two ways, depending on whether the amalgamating companies:

Are unrelated (there can be exceptions to this) – sometimes referred to as long form amalgamations where compensation for the lost investment represented by cancelling the shares in the company or companies to be removed is the key feature, as covered by sections 219-221 Companies Act 1993; or
Are within a group or have common shareholding, directly or indirectly – referred to as short form amalgamations, as covered by section 222(1) or (2) Companies Act 1993, as the case may be. These are short, as there is no shareholder participation, no notice to shareholders and no public notice.

Under the Companies Act 1993 the following documents must be filed.

Proposal that sets out the information required by the Act and is not dated or signed (section 220) but is to be approved by resolution of the board of each amalgamating company;
Certificate from the directors of each amalgamating company that:
the amalgamation will be in the best interests of the particular company and
that the amalgamated company will satisfy the solvency test immediately after the amalgamation has become effective, plus the grounds for both (section 221(2));
Certificate from the board of each amalgamating company that:
the amalgamation has been approved in accordance with the Act, and
if the particular company has a constitution, the amalgamation has also been approved in accordance with that constitution (section 223(c));
Certificate from the board of the intended amalgamated company (section 223(e)) only if applicable | that is, where both of two amalgamating companies or at least two in a multi-company amalgamation have creditors ;
Consents using Form 13 [55 kB PDF] from the directors of the intended amalgamated company (section 223(f)), irrespective of whether they will be the same people as before; and Fee of NZ$306.67.

The following documents must be filed:

Resolutions from the board of each amalgamating company under section 222(1) or (2), as the case may be. These are equivalent to the long form proposal (section 222(4));
Certificate from the directors of each amalgamating company that the amalgamated company will satisfy the solvency test immediately after the amalgamation has become effective plus the grounds for the directors’ belief that this will be so (section 222(5)). Note | The 'best interests' point of the long form procedure is presumed in this context and is not to be included in the resolutions or certificates;
Certificate from the board of each amalgamating company that the amalgamation has been approved in accordance with the Act and, if the particular company has a constitution, with that constitution also (section 223(c));
If applicable | Certificate from the board of the intended amalgamated company (section 223(e)). That is, where both of two amalgamating companies or at least two companies in a multi-company amalgamation have creditors ;
Consents using Form 13 [55 kB PDF] from the directors of the intended amalgamated company, irrespective of whether they will be the same people as before (section 223(f)); and
Fee of NZ$306.67.

Types of short form amalgamations
There are two types of short form amalgamations, with similar documentation for each, changed appropriately:

Type 1 - section 222(1)
Is where the holding company must be the amalgamated company ("the company first referred to" in the section) and where its shares and constitution will continue; and

Type 2 - section 222(2)
Is where the amalgamating companies are directly or indirectly held by the same person(s), where either of two, or in the case of a multi-company amalgamation, any one of the companies, can be the amalgamated company.

Note | All resolutions and certificates must refer to all the amalgamating companies. A five-company amalgamation, for example, will have documents that each refer to all five names. This is logical, as the boards are all approving the same proposed amalgamation, just as if they were all to participate in the same building project.

FAQs
What must be included in the resolutions?
The resolutions must contain all the elements of either section 222(1) or (2), as the case may be. These are:

Approval of the proposed amalgamation, naming all the amalgamating companies, identifying the amalgamated company early on;
Cancelling without payment or other compensation the shares of the company or companies that are to be removed on amalgamation;
Identifying the constitution of the amalgamated company for the future as being that of the holding company (section 222(1)-type) or the amalgamating company the shares in which will not be cancelled (section 222(2)-type);
Stating that on reasonable grounds the amalgamated company will satisfy the solvency test immediately after the amalgamation becomes effective; and
Naming the director/s of the intended amalgamated company.

There are two possible additions – stipulating a date for the amalgamation to become effective that can be the same as the date of filing or a later date for the amalgamation to become effective (section 224(2)) and changing the name of the amalgamated company (section 223(d)).

Stipulating a date
If a date is stipulated, you must file the amalgamation documents with the Registrar on that day or earlier (section 224(2)). Filing the amalgamation documents after the stipulated date results in the date of receipt becoming the effective date.