Amalgamation: Basics and Process

By Jonathan Hureau

Amalgamation is the fusion of two or more corporations and their continuance as one corporation.[2] Under the Business Corporations Act (Ontario)[3] (the “BCA”), Articles of Amalgamation must be completed and filed by one of the amalgamating corporations for two or more active Ontario business corporations to be amalgamated.

An amalgamation may be completed by a short-form method or a long-form method depending on the circumstances. More specifically, the short-form method involves an amalgamation of a holding corporation and one or more of its subsidiaries or an amalgamation of subsidiaries, which must be approved by the directors of each amalgamating corporation as required by section 177 of the BCA.[4] Otherwise, a long-form method will need to be selected whereby an amalgamation agreement must be adopted by the shareholders of each amalgamating corporation, as required by subsection 176(4) of the BCA.[5]

To further summarize, in a short-form amalgamation all of the issued shares of each amalgamating subsidiary corporation will be held by one or more of the other amalgamating corporations or will be held by the same holding corporation in the scenario of an amalgamation of two or more subsidiary corporations of the same holding corporation.[6] In contrast, a long-form amalgamation will require the two or more Ontario business corporations that are amalgamating to enter into an amalgamation agreement setting out the terms upon which and means by which they are amalgamating.[7]

Notably, the agreement for a long-form amalgamation must comply with section 175 of the BCA and be adopted by a special resolution of the shareholders under section 176 of the BCA before the amalgamation is submitted to the Ministry of Public and Business Service Delivery (the “Ministry”).[8] The filing with the Ministry will further require a statement signed by a director and officer pursuant to subsection 178(2) of the BCA and a fully signed copy of the aforesaid amalgamation agreement. [9]

In terms of the corporate name of an amalgamated corporation, it can be identical to the name of one of the amalgamating corporations provided that it is not a number name (e.g. 1234567 Ontario Inc.).[10] Alternatively, it can be elected in the Articles of Amalgamation for the amalgamated corporation to be assigned an automatically generated number name. Otherwise, a new corporate name may be selected for the amalgamated corporation. In this case, an Ontario NUANS (i.e. Newly Upgraded Automated Name Search) report must be obtained to ensure the name is available. Furthermore, such a corporate name must comply with requirements under the BCA and its regulations.[11]

A date will need to be requested to be the effective date for an amalgamation. A past date cannot be selected, but a future date can be chosen that may be up to thirty days from the current date provided any NUANS report remains valid. Notwithstanding the request of such a preferred date, however, the earliest possible effective date will be the date that acceptable application materials for the amalgamation are received by the Ministry.[12]

Other items that are required to be indicated in the Articles of Amalgamation that are filed with the Ministry include the registered office address, number of directors, and authorized share classes of the amalgamated corporation, amongst others.[13]

If the application is successful, the Ministry will provide official documents including the Certificate of Amalgamation by e-mail. Further, a notification will be sent to the e-mail addresses for the amalgamating corporations to confirm to them that the amalgamation has been completed.[14]

To summarize, there are many other factors that need to be considered in the process of an amalgamation involving Ontario business corporations. The purpose of this article has been limited to providing an introduction to the concept and a review of some of the documentation requirements.

Legal Disclaimer: The above article is for informational purposes only. It does not constitute legal advice on any matter or create a solicitor-client relationship.