Bermuda ruling reinforces principle of continuation of entities on amalgamation

On 12 November 2021, the Bermuda Supreme Court issued its written judgment in NKWE Platinum Limited v. Glendina PTY et al. [2021] SC (Bda) 86 Com.

The judgment reinforces the established understanding that an amalgamation under the Companies Act 1981 of Bermuda (Companies Act) involves neither the cessation of the existence of the amalgamating entities and the creation of a new amalgamated entity, nor the transfer or assignment of the property and liabilities of the amalgamating entities to the amalgamated entity.

Rather, an amalgamation has the effect that the amalgamating companies continue to exist following the amalgamation as one amalgamated company. In addition, their property and liabilities continue to be that of the amalgamated company by operation of law.

In the NKWE Platinum case, it was argued that a contractual right of one amalgamating company, which required consent to transfer, was terminated by reason of the amalgamation being a transfer of property to the amalgamated company. The Court rejected this concept.

Comment

The Chief Justice’s analysis was consistent with past Bermuda Court decisions which considered, and followed, Canadian jurisprudence on the effect of an amalgamation on the amalgamating companies and their respective assets and liabilities. Such an approach is entirely appropriate given that the relevant amalgamation provisions of the Companies Act are almost identical to those from which they were drawn, those of the Canadian Business Corporations Act R.S.C., 1985, c. C-44 (CBCA).

Will the two jurisdictions’ interpretation and application of their respective statutory amalgamation provisions remain aligned in these areas, like two streams flowing in the same direction, or will the Court give meaning to Bermuda’s legislative differences?