Corporate Law in Toronto

An amalgamation permits two or more corporations, including holding or subsidiary corporations, to be combined into one corporation. We can assist you with your corporate amalgamation. Amalgamations are often used during the purchase of a business or as part of a reorganization which may be undertaken for corporate or tax reasons. During an amalgamation, all the assets and liabilities of the amalgamating corporations continue into the amalgamated corporation.

The corporations that are to be amalgamated must be governed by the same law. For example, the corporations must be both Ontario corporations or must be both Canada corporations. If the corporations are not governed by the same law, you must first continue a corporation into the jurisdiction of the other corporations. More information on continuances can be found here.

For both Ontario corporations and Canada corporations, there are two types of amalgamations. A short for amalgamation and a long form amalgamation. In both a long form amalgamation and a short form amalgamation, you can amalgamate more than two corporations at a time.

Short Form Corporate Amalgamation

A short-form amalgamation is easier to complete as an amalgamation agreement is not necessary. Rather, a short form amalgamation must simply be  approved by a resolution of the directors. It does not require approval of the shareholders. There are two types of short-form amalgamation.

  • Horizontal Short Form Amalgamation – A horizontal short-form amalgamation involves the amalgamation two or more wholly-owned subsidiaries of the same holding corporation (also known as the parent corporation). Once this amalgamation is complete, the shares of all but one of the subsidiaries will be cancelled. The articles of amalgamation of the amalgamated corporation must be the same as the articles of the amalgamating subsidiary corporation whose shares are not cancelled. The one exception to the foregoing is the name, which can be different.
  • Vertical Short Form Amalgamation – A vertical short-form amalgamation involves a holding corporation (also known as a parent company) and one or more wholly-owned corporate subsidiaries. Once this amalgamation is complete, the articles of amalgamation must be the same as the articles of the amalgamating holding corporation, except for the name, which can be different.

Long Form Corporate Amalgamation

Anything that is not considered a short form amalgamation is considered a long form corporate amalgamation. A long-form amalgamation requires each amalgamating corporation to sign an amalgamation agreement and submit it for approval at a meeting of shareholders. An amalgamation agreement will set out the terms under which the corporations are to amalgamate.

Amalgamate an Ontario Corporation

The amalgamation provisions of the Ontario Business Corporations Act (the “OBCA“) are contained in Subsections 174– 179. Section 177 of the OBCA allows for a a Short Form Amalgamation to be approved by a directors resolution of each of the amalgamated corporations. Section 175 of the OBCA lists the general requirements of the amalgamation agreement which are:

  1. the provisions that are required to be included in articles of incorporation under section 5 of the OBCA (corporate address, corporate name, directors, address of directors etc.);
  2. the basis upon which and manner in which the holders of the issued shares of each amalgamating corporation are to receive, securities of the amalgamated corporation, money, or securities of any body corporate other than the amalgamated corporation, in the amalgamation;
  3. the manner of payment of money instead of the issue of fractional shares of the amalgamated corporation or of any other body corporate the securities of which are to be received in the amalgamation;
  4. whether the by-laws of the amalgamated corporation are to be those of one of the amalgamating corporations and the address where a copy of the proposed by-laws may be examined; and
  5. such other details as may be necessary to complete the amalgamation and to provide for the subsequent management and operation of the amalgamated corporation.

Amalgamate an Canada Corporation

The amalgamation provisions of Canada Business Corporations Act (the “CBCA“), are contained in Subsections 181–186.1. Section 182 lists the  The amalgamation agreement list general requirements of the amalgamation agreement which are:

  • the provisions required in the articles of amalgamation (corporate address, corporate name, directors, address of directors etc.);
  • an explanation of how shares of each amalgamating corporation will be converted into shares or other securities of the amalgamated corporation
  • a statement, if any shares of an amalgamating corporation are not to be converted into securities of the amalgamated corporation, of the amount of money or securities that the holders of such shares are to receive from any body corporate in addition to or instead of securities of the amalgamated corporation
  • a description of the manner of payment of money instead of the issue of fractional shares of the amalgamated corporation or of any other body corporate the securities of which are to be received in the amalgamation
  • the proposed by-laws, indicating whether they are new or consist of the by-laws of one of the amalgamating corporations; and
  • such other details as may be necessary to complete the amalgamation and to provide for the subsequent management and operation of the amalgamated corporation.

Summary

Amalgamation are complex and can have adverse legal consequences if not properly undertaken. Since we focus on corporate law, Pawlina Law can assist you with your amalgamation. Please do not hesitate to contact us.