What is an Amalgamation Agreement?
Amalgamation Agreement is a legal agreement document used by two or more companies with a desire of amalgamating. Amalgamation allows companies to combine all assets and liabilities of each entity forming one new corporation. Amalgamation carries out many advantages such as an increase of capital, eliminating more competitors, and more.
How to Make an Amalgamation Agreement?
Extra care must be taken when making an amalgamation contract. It must be specific and comprehensive. While daunting as it may seem, follow these smart key points in making a valid amalgamation agreement.
1. Specific, Complete Entities
One must not be mistaken to input are the names of the amalgamating corporations. This is to impose trust of the amalgamation. Spell out specifically their legal and official names, with the state and complete principal place of business or website address. Also, it is important to identify which company is considered to be the first company or second company and so forth. In amalgamation, the transferor company is a term used to name the amalgamating company while the transferee company is used to name the company that is amalgamated. After amalgamation, these prior and distinct companies will no longer be separate entities.
2. Date of Effectivity
One another substantial thing to indicate is when will be the business agreement be effective and the provision of law from whatever state your new corporation will form. It is better to write a separate paragraph for this section right after you introduce the amalgamating companies.
3. Financial Status
It is vital within an amalgamating agreement to disclose each financial statement and position to each other. Be sure it is exact and complete with the agreed and uniformed currency to avoid confusion and ambiguity.
4. The Agreed Terms
As a new form corporation is built, the amalgamation agreement should always entail specific recitals within. Such recitals need to be clarified are the name of the newly formed corporation, the date the new corporation will start to operate, specified address of the new corporation, capital of the corporation, terms, and conditions of possible transfer of shares, specification of the board of directors per amalgamating company, assets of each company prior to the amalgamation, purchases and others.
5. Severability Cause, Amendments and Termination
An amalgamation agreement should explicitly indicate the amendment terms for the newly formed corporation. These amendments are formally written with the consent of the Board of Directors. The date of effectivity should be entailed in the Amendment letter. Furthermore, The amalgamation agreement may also vulnerable to termination by the Board of Directors. This can only happen before the issuance of the amalgamation certificate, with respect to the Amalgamation Agreement.
6. Legal Framework
Under any process of amalgamation, always find it with applicable laws and rules provided by the state government. These laws vary from different states. Under any process planned for the amalgamated new corporation, from board meetings, stock exchange, shareholders, even in advertising and marketing and more should be governed by any legal framework by the respective statute. Lastly, miss not to indicate the signatures of the amalgamating companies. Have enough space for their signature, for their name and title.