Guide on amalgamating business corporations
Amalgamation is a process by which two or more corporations governed by the Canada Business Corporations Act, the "amalgamating corporations," merge and carry on as one corporation, the "amalgamated corporation". Amalgamations can be made through the Online Filing Centre. Corporations Canada offers several methods of filing (see How do I file my application under the Canada Business Corporations Act (CBCA)?). You will have to pay a filing fee (see Services, fees and turnaround times – CBCA).
The effective date of an amalgamation is the date on which Corporations Canada receives your application for amalgamation or any later date requested.
The information provided here is not intended to replace legal advice. Consider consulting a lawyer or another professional advisor to ensure that the requirements of the Canada Business Corporations Act are met.
There are two ways to amalgamate under the CBCA.
A long-form amalgamation requires each amalgamating corporation to sign an amalgamation agreement and submit it for approval at a meeting of shareholders. The amalgamation agreement sets out the terms and means of carrying out the amalgamation and must include:
- the provisions required in the articles of amalgamation
- the name and address of each proposed director of the amalgamated corporation
- 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
- details of any arrangements necessary to complete the amalgamation and to provide for the subsequent management and operation of the amalgamated corporation.
The articles of amalgamation submitted to Corporations Canada must include the provisions agreed on in the amalgamation agreement.
A short-form amalgamation is approved by a resolution of the directors and does not require approval of the shareholders. It is often faster than long-form amalgamation. There are two types of short-form amalgamation.
- A vertical short-form amalgamation involves a holding corporation and one or more wholly-owned subsidiaries. In this case, the articles of amalgamation must be the same as the articles of the amalgamating holding corporation, except for the name, which can be different.
- A horizontal short-form amalgamation involves two or more wholly-owned subsidiaries of the same holding corporation. The shares of all but one of the subsidiaries will be cancelled as part of the amalgamation with no repayment of capital in respect of those shares. The articles of amalgamation must be the same as the articles of the amalgamating subsidiary corporation whose shares are not cancelled, except for the name, which can be different.
Documents to file to amalgamate two or more corporations
An application to amalgamate must include the following:
- a completed and signed Form 9 – Articles of Amalgamation (see Federal incorporation forms; Instructions for completing Form 9 – Articles of Amalgamation are also available)
- a completed and signed Form 2 – Initial Registered Office Address and First Board of Directors (see Federal incorporation forms; Instructions for completing Form 2 – Initial Registered Office Address and First Board of Directors are also available)
- a statutory declaration from a director or officer of each amalgamating corporation
- a Nuans corporate name search report, unless the amalgamated corporation will use the corporate name of one of the amalgamating corporations
- the filing fee (see Services, fees and turnaround times – CBCA).
The articles can be in the official language of your choice. This means they may be:
- in a format that uses either official language (in English or in French)
- in a format that employs both English and French, or
- in a fully bilingual format, using both official languages equally.
The statutory declaration (see Model statutory declaration) must include statements that specify that, on the effective date of the amalgamation:
- each amalgamating corporation is able, and the amalgamated corporation will be able, to pay its liabilities as they become due
- the realizable value of the amalgamated corporation's assets will not be less than the aggregate of its liabilities, and
- one of the following statements are true:
- there are reasonable grounds for believing that no creditor will be prejudiced by the amalgamation, or
- adequate notice has been given to all known creditors of the amalgamating corporation and no creditor objects to the amalgamation on reasonable grounds.
The statutory declaration must be signed by a director or officer of each amalgamating corporation.
When a provincial corporation amalgamates with a federal corporation
To ensure that an application for amalgamation is processed, all of the amalgamating corporations must be incorporated under the CBCA. This means that if one of the corporations is incorporated under another statute, it must first continue into the CBCA (see Continuance (import) of an incorporated business) before it can amalgamate with the other corporations.
The CBCA does not apply until after a certificate of continuance has been issued. Consequently, two meetings must be held according to different requirements.
- The meeting convened to pass the resolution to amalgamate must be held according to the CBCA requirements for a meeting of shareholders.
- The meeting to approve the resolution to continue must meet the requirements of the legislation that governed the corporation prior to the continuance.
To speed up the process, articles of continuance can be filed at the same time as articles of amalgamation.
Provincial and federal corporations can also amalgamate through an arrangement. An arrangement is a transaction authorized by the CBCA that allows a court to supervise a fundamental change to one or more corporations that is not possible to complete under any other provision of the statute.
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