Debate continues on the legal consequences of amalgamations under Part 15

In the Summer 2008 issue of Commercial Quarterly we noted the Court of Appeal's decision in Elders New Zealand Limited v PGG Wrightson Limited dealing with the legal consequences on third party contracts of court ordered amalgamations under Part 15 of the Companies Act. However the Court of Appeal's decision may not be the final word on this topic.

In Elders New Zealand Ltd v PGG Wrightson Ltd¹, the Court of Appeal upheld the High Court's earlier decision that court ordered amalgamations under Part 15 of the Companies Act 1993 (the Act) could result in the same legal consequences as amalgamations under Part 13 of the Act – namely that the amalgamated company stands "in the shoes of the amalgamating companies" and therefore receives the benefits of, and incurs the obligations pertaining to, all assets and liabilities of the amalgamating companies. For further details on this decision refer to our earlier article Amalgamations and their effect on existing contractual relations.

However, on 18 April the Supreme Court² granted leave to appeal the court's decision on the following grounds:

(1) Whether an amalgamation approved under part 15 of the Act has the same effect as an amalgamation under Part 13;

(2) Whether the final order made by the High Court under Part 15 had the legal consequence that Pyne Gould Guiness Ltd and Wrightson Ltd continue as one company, namely PGG Wrightson Ltd.

The hearing date has been set down for 12 August 2008. We will keep you informed of further developments.

¹ [2007] NZCA 596

² [2008] NZSC 30

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