Amalgamation
An amalgamation is a statutory process that merges two or more corporations into a single continuing corporation, which automatically takes on the assets, liabilities and obligations of the companies that combined. It is a common way to restructure related companies, including after one company buys another’s shares.
Amalgamation is a specific legal mechanism, set out in corporate statutes, for combining companies. Rather than one company buying another’s assets or winding one up and starting fresh, the corporations amalgamate and continue as a single new legal entity that inherits everything the predecessor companies had.
Why companies amalgamate
- To simplify a group structure after an acquisition, folding a target company into the buyer
- To combine operations of related companies for tax or administrative efficiency
- As a step in a larger reorganization, such as preparing a company for sale
What carries over
Because the amalgamated corporation is a continuation of the predecessors rather than a new company starting from zero, it generally keeps their contracts, permits and liabilities. That continuity is often the point, but it also means any problem in one predecessor company, such as an undisclosed liability, follows into the amalgamated entity.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryCorporate Law
- 02Treadstone LawLegal commentaryMergers & Acquisitions
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