Amalgamation is the process whereby two or more Singapore companies are combined so that the property, rights, privileges, liabilities and obligations of the amalgamating (discontinuing) Singapore companies are transferred to, and vest in, one amalgamated (surviving) company. The shareholders of both companies become shareholders of the newly amalgamated company.
In Singapore there are two types of voluntary amalgamations:
- Short-form amalgamation (intra-group restructuring/re-organisation)
- Long-form amalgamation
A short-form amalgamation procedure is only available to companies within the same corporate group and where there are no minority interests. While long-form amalgamation is generally for unrelated companies that would like to merger. In this article we will focus on the short-form amalgamation process.
A short-form amalgamation procedure is only allowed in the following situations:
- Amalgamation between a holding company and its 100%-owned subsidiaries
- Amalgamation between 2 or more wholly owned subsidiaries under the same corporation
The purpose of a short-form amalgamation is to allow for Singapore companies that are 100% held by a common parent to restructure through an amalgamation exercise in a quick and cost-effective manner. The entire process would generally take less than 6 months.
When do companies carry out short form amalgamation?
Companies in the same group that is 100% directly or indirectly held by a common parent company can choose to amalgamate for the following reasons:
- This is commonly done when a business enters a new market and acquires its smaller competitors to rapidly gain market share and then amalgamate these acquired entities into a single local entity. The consolidation allows the business to cut cost by remove overlapping functions and increase efficiency and house everything under one brand.
- This allows the companies to combine their expertise and products, making the new company more efficient and giving it a bigger share of the market.
- Amalgamation is one way that businesses use to reduce their number of legal entities, especially if there are some entities that are dormant or having only minimum business activities. A business can amalgamate the businesses into one entity which helps to reduce its regulatory and compliance cost.
If your business has Singapore companies that fit the above reasons, you can consider to carry out a short form amalgamation.
NovoPlus can help
In Novoplus, we are professionals with years of experience in dealing with corporate restructuring and reorganisation which includes handling the merger of Singapore companies through the short form amalgamation process.
Please feel free to contact us at finance@novopluscorp.com or reach out to us on Whatsapp using the button on the right of the website to find out more on how we can assist your business.
Last Updated on 01/07/2024 by Dennis Chew