An amalgamation is the statutory route two Canadian corporations use to combine into a single continuing entity by operation of law, carrying every contract, liability and lawsuit forward automatically — the mechanism a fund's acquisition vehicle typically uses the day after closing.
Federally, the mechanism is a short statutory chain: under the Canada Business Corporations Act, s. 181, "two or more corporations, including holding and subsidiary corporations, may amalgamate and continue as one corporation". The effect, once the certificate issues, is set out in s. 186: the property of each amalgamating corporation continues to be the property of the amalgamated corporation, the amalgamated corporation continues to be liable for each one's obligations, pending civil, criminal or administrative proceedings continue against it, and the articles of amalgamation are deemed to be its articles of incorporation. A target's contracts, permits and pending litigation carry over automatically — nothing needs to be individually reassigned, unlike an asset purchase, where each contract has to be assumed one by one.
Most amalgamations need a shareholder vote by special resolution — two-thirds of votes cast. Where one CBCA corporation already wholly owns the other, s. 184 allows a short-form vertical (holding company and its wholly-owned subsidiary) or horizontal (two wholly-owned subsidiaries of the same parent) amalgamation "without complying with sections 182 and 183" — no shareholder vote and no separate amalgamation agreement. That short-form route is exactly what a fund's acquisition vehicle typically uses the day after closing: having bought 100% of a target's shares, it amalgamates vertically with the target under s. 184 rather than running a full long-form amalgamation, precisely because the parent-subsidiary relationship already exists and there is no minority shareholder left to protect.
A fund incorporates a new CBCA holding company, Sponsor Acquireco Inc., to carry the acquisition debt, and closes on 100% of Target Inc.'s shares on July 15. On July 16, Acquireco and Target amalgamate under the s. 184 short-form vertical procedure — no shareholder vote, no separate amalgamation agreement, since Acquireco already owns every Target share. The resulting single corporation automatically carries Acquireco's acquisition-loan liability alongside Target's operating assets, employees and existing supply contracts, all of which survive the amalgamation unaffected under s. 186 rather than needing individual assignment.
See also: Continuance under the CBCA · Holding company.
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