January 2016 - Interim Tax Measures for Court-Free Amalgamation
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Interim Tax Measures for Court-Free Amalgamation
In order to modernize Hong Kong’s company law and enhance Hong Kong’s international business and financial centre status, the government rewrote the Companies Ordinance. The New Companies Ordinance (“New CO”) came into effect on 3 March 2014. One of the significant changes to the Companies Ordinance is the introduction of a court-free amalgamation which allows a group of companies to restructure and streamline its business easier. Before such change, amalgamation could only be done by a court-sanctioned scheme of arrangement.The process is costly and therefore was seldom used.
Amalgamation has no legislative interpretation in the New CO. Generally, it refers to a legal process by which the undertaking, property and liabilities of two or more companies merge and their shareholders become the shareholders of one amalgamated company.
On the effective date of an amalgamation, each amalgamating company ceases to exist and the amalgamated company succeeds to all the property, rights and privileges, and all the liabilities and obligations, of each amalgamating company.
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