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As enacted
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Part VIII · Amalgamations

242. Short form amalgamation

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

A company and one or more other companies that are directly or indirectly wholly owned by it, may amalgamate and continue as one company (being the company first referred to) without complying with the provisions of section 240 and section 241, if—

(a)

the amalgamation is approved by a resolution of the board of each amalgamating company ; and

(b)

each resolution provides that—

(i)

the shares of each amalgamating company, other than the amalgamated company, will be cancelled without payment or other consideration ;

(ii)

the articles of the amalgamated company will be the same as the articles of the company first referred to ;

(iii)

the board is satified that the amalgamated company will immediately after the amalgamation becomes effective, satisfy the solvency test ; and

(iv)

the person or persons named in the resolution will be the director or directors of the new company.

(2)

Two or more companies each of which is directly or indirectly wholly owned by the same company, may amalgamate and continue as one company without complying with the provisions of section 240 or section 241 if—

(a)

the amalgamation is approved by a resolution of the board of each amalgamating company ;

(b)

each resolution provides that—

(i)

the shares of all but one of the amalgamating companies will be cancelled without payment or other consideration ;

(ii)

the articles of the amalgamated company will be the same as the articles of the amalgamating company whose shares are not cancelled ;

(iii)

the board is satisfied that the amalgamated company will immediately after the amalgamation becomes affective, satisfy the solvency test ; and

(iv)

the person or persons named in the resolution will be the director or directors of the new company.

(3)

The board of each amalgamating company shall, not less than twenty working days before the date on which the amalgamation is intended to become effective—

(a)

give written notice of the proposed amalgamation to every secured creditors of the company ; and

(b)

give public notice of the proposed amalgamation.

(4)

The resolutions approving an amalgamation under this section shall, taken together, be deemed to constitute an amalgamation proposal that has been approved.

(5)

The directors who vote in favour of a resolution required under subsection (1) or subsection (2), as the case may be, shall sign a cerificate stating that in their opinion, the conditions set out in subsection (1) or subsection (2) are satisfied, and setting out the reasons for reaching that opinion.

(6)

For the purposes of this section, the solvency test shall be applied without taking into account the stated capital of the amalgamated company.

(7)

A director who fails to comply with subsection (5)

shall be guilty of an offence and be liable on conviction to a fine not exceeding two hundred thousand rupees.

Read on from s 243

Part IX

Compromises with Creditors

Read on from Part IX

Part X

Approval of Arrangements, Amalgamations, and Compromises by Court

Read on from Part X

Part XI

Provisions Relating to Offshore Companies

Read on from Part XI

Part XII

Winding Up

Read on from Part XII

Part XIII

Administrators Appointment of Administrator

Read on from Part XIII

Part XIV

Floating Charges

Read on from Part XIV

Part XV

Receivers and Managers

Read on from Part XV

Part XVI

Registrar-General of Companies and Registration Appointment of Officers

Read on from Part XVI

Part XVII

Application of Act to Existing Companies

Read on from Part XVII

Part XVIII

Overseas Companies

Read on from Part XVIII

Part XIX

Advisory Commission

Read on from Part XIX

Part XX

Companies Disputes Board

Read on from Part XX

Part XXI

Offences Miscellaneous Offences

Read on from Part XXI

Part XXII

Miscellaneous Prohibition of Partnership with More Than Twenty Members

Read on from Part XXII

Part XXIII

Repeals and Amendments

Read on from Part XXIII

Schedules