What Is An Amalgamation Agreement
As two or more companies merge, a merger results in the creation of a larger unit. The ceding company – the weakest company – is included in the stronger transfer company, and forms a completely different business. The result is a stronger and larger customer base, which also means that the newly created entity has more assets. The ceding company`s activity will continue after the merger. No adjustments are made to accounting values. The shareholders of the ceding company, which holds at least 90% of the face value of the shares, become shareholders of the ceding company. On the other hand, if there is too much competition, a merger can lead to a monopoly that can be a problem for consumers and the market. This can also lead to the downsizing of the new company, as some jobs are doubled and, as a result, some employees become obsolete. It also increases debt: by merging the two companies, the new entity takes over the debts of both companies. A holding company that wishes to merge with one or more of its 100% subsidiaries is not required to prepare and submit a merger agreement for shareholder approval, if: to ensure that a merger application is processed, all merging companies must be integrated into the CBCA. This means that one of the companies, when included in another status, must first enter the CBCA (see continuity (import) of a registered business before it can partner with other capital companies. The first step in the implementation of a merger is to enter into an agreement containing the terms and means of execution of the merger, including the form of the proposed statutes.
It is desirable that the statutes of one of the merger companies be adopted as the statutes of the merged entity. Once the merger agreement is concluded, it must be approved by the board of directors of the merging companies and subject to the approval of the shareholders of each of the companies that merge them.