The Companies (Cross-Border Mergers) Regulations 2007/2974 implement the European Directive on Cross-Border Mergers of Limited Liability Companies (Directive 2005/56/EC). This makes it possible for a transferor company to transfer assets and liabilities to a transferee company, without the transferor company needing to go into liquidation. The merger must involve at least one company formed and registered in the UK and at least one company formed and registered in an EEA state other than the UK.
It is also possible for a limited liability partnership (LLP) to carry out a cross border merger. The relevant legislation is part 10 of The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009. This legislation applies certain modifications to The Companies (Cross-Border Mergers) Regulations 2007, to take into account the different structure of an LLP and a company.
Transferee company – this is the company to which assets and liabilities are to be transferred. This is the remaining company once the merger is complete.
Transferor company – this is the company from which the assets and liabilities are to be transferred. This company will cease to exist on completion of the merger.
Different types of merger
- a. Merger by absorption
This is where one or more companies transfer all their assets and liabilities to another existing company. Every transferor company is dissolved without going into liquidation.
- b. Merger by absorption of a wholly owned subsidiary
This is where a company transfers all its assets and liabilities to another company which holds all the shares or other securities representing its capital. The transferor company is dissolved without going into liquidation.
- c. Merger by formation of a new company
This is where two or more companies transfer all their assets and liabilities to a new company formed for the purposes of the merger. The transferor companies are dissolved without going into liquidation.
A UK merging company should apply to the court for an order certifying that the company has properly completed the pre-merger acts and formalities for the cross-border merger. The court may also, at the request of a creditor or member of a UK merging company, require the UK company to seek the approval of creditors or members to the terms of the merger. There are also obligations to inform employees of the details of the merger and various other requirements.
RKG Consulting will be pleased to advise you regarding the full procedures for cross-border mergers and to assist you to complete these formalities.