The Cross-Border Mergers of Limited Liability Companies Regulations (subsidiary legislation 386.12) provides that a ‘merger’ means any one of the following operations in Maltese company law:

When one  or  more  companies,  on  being  dissolved  without going  into  liquidation,  transfer  all  their  assets,  rights, liabilities and obligations to another existing company (“the acquiring company”) in exchange for the issue to their members of securities or  shares  representing  the capital of that other company and, if applicable, a cash payment not exceeding 10% of the nominal value, or, in  the  absence  of  a  nominal  value,  of  the  accounting par  value  of  those  securities  or  shares [Merger by acquisition];

When two  or  more  companies,  on  being  dissolved  without going  into  liquidation,  transfer  all  their  assets,  rights, liabilities and obligations to a company that they form(“the new company”) in exchange for the issue to their members   of   securities   or   shares   representing   the capital of that new company and, if applicable, a cash payment  not  exceeding  10%  of  the  nominal  value,  or in  the  absence  of  a  nominal  value,  of  the  accounting par  value  of  those  securities  or  shares [Merger by formation];

When a company, on being dissolved without going into liquidation, transfers all its assets, rights, liabilities and   obligations   to   the   company   holding   all   the securities   or   shares   representing   its   capital (“the acquiring company”).

For the regulations on cross-border mergers to apply, the companies involved would need to have been formed in accordance with the laws of a Member State, having their registered office or place of administration with an EU Member State. Moreover, at least two of the involved companies in a cross-border merger are governed by the laws of two different Member States. It is also further required that one of the companies, or the resulting company form the merger, is registered in Malta.

The regulations however, do not apply  to  cross-border  mergers involving a company the object of which is the collective investment of capital provided by the public, which operates on the principle of risk-spreading and the units of which are, at the holders’ request, repurchased or redeemed, directly or indirectly, out of the assets of that company.

For a cross-border merger to take place, the merging companies shall have their administrative and managing organs draw up the common draft terms of cross-border merger which shall include at least the following:

(a)   the  form,  name  and  registered  office  of  the  merging companies   and   those   proposed   for   the   company resulting from the cross-border merger;

(b)   the  ratio  applicable  to  the  exchange  of  securities  or shares   representing   the   company   capital   and   the amount of any cash payment;

(c)    the terms  for  the  allotment  of  securities  or  shares representing the capital of the company resulting from the cross-border merger;

(d)   the likely repercussions of the cross-border merger on employment;

(e)   the  date  from  which  the  holding  of  such  securities  or shares representing the company capital will entitle the holders  to  share  in  profits  and  any  special  conditions affecting that entitlement;

(f) the  date  from  which  the  transactions  of  the  merging companies  will  be  treated  for  accounting  purposes as being  those  of  the  company  resulting  from  the  cross-border merger;

(g)   the rights conferred by the company resulting from the cross-border   merger   on   members   enjoying   special rights  or  on  holders  of  securities  other  than  shares representing  the  company  capital,  or  the  measures proposed concerning them;

(h)   any  special  advantages  granted  to  the  experts  who examine the draft terms of the cross-border merger or to members   of   the   administrative, management, supervisory   or   controlling   organs   of   the   merging companies;

(i) the statutes of the company resulting from the cross-border merger;

(j) where appropriate, information  on  the  procedures  by which arrangements for the involvement of employees in  the  definition  of  their  rights  to  participation  in  the company  resulting  from  the  cross-border  merger  are determined;

(k) information   on   the   evaluation   of   the   assets   and liabilities   which   are   transferred   to   the   company resulting from the cross-border merger;

(l) dates of the merging companies’ accounts used to establish the conditions of the cross-border merger. Registration and publication of the common draft terms of cross-border merger.

The resulting common draft terms of the cross-border merger are to be delivered to the Registrar for registration by the Maltese merging company or companies, duly signed by at least one director and company secretary of such company or companies.

Having been satisfied that the requirements of the common draft terms set out by the regulations are met, the Registrar shall register the common draft terms of cross-border merger and shall cause without delay a statement to be published in the Gazette or on the website maintained by the same Registrar showing:

(a)   the date on which registration was made, together with an indication that  the  document  registered  relates  to the common draft terms of the cross-border merger;

(b)   the type, name and registered office of every merging company;

(c)    the  register  in  which  the  documents  referred  to  in Article  3(2)  of  Directive  68/151/EEC  are  filed  in respect  of  each  merging  company,  and  the  number  of the entry in that register;

(d)   an  indication,  for  each  of  the  merging  companies,  of  the arrangements made for the exercise of the rights of creditors and of any minority members of the merging companies    and    the    address    at    which    complete information  on  those  arrangements  may  be  obtained free of charge.

The publication of the common draft terms in the Gazette or on the website maintained by the Registrar shall take place at least one month before the date of the general meeting which is to decide on the approval of the common draft terms of the cross-border merger.

In relation to the common draft terms of the cross-border merger there shall be drawn up two reports, being the report of the board of directors and the independent expert report.

The report drawn up by the board of directors of the Maltese merging company or companies, is intended for the members explaining and justifying the legal and economic aspects of the cross-border merger and explaining the implications of the cross-border merger for members, creditors and employees. It shall be made available to the members and to the representatives of the employees, or to the employees themselves when there are no such representatives, at least one month before the date of the general meeting.

The report drawn up by an independent expert or experts acting on behalf of each Maltese merging company but independent of it and approved by the Registrar, shall be based on the examination of the common draft terms of the cross-border merger. This report is to be made available to the members not less than one month before the date of the general meeting. The experts’ examination of the common draft terms shall serve for the report to specify whether the share exchange ratio is fair and reasonable and to this effect it shall:

(a)   indicate  the  method  or  methods  used  to  arrive  at  the share exchange ratio proposed;

(b)   state whether such method or methods are adequate in the case  in  question,  indicating  the  values  arrived  at using  such  method  or  methods  and  giving  an  opinion on the relative importance attributed to such method or methods in arriving at the value decided on;

(c)    describe  any  special  valuation  difficulties  which  have arisen.

The  extraordinary  resolution  taken  by  the  Maltese merging company or companies approving the cross-border merger together with the instruments giving effect thereto, or an authentic copy thereof, shall be delivered for registration to the Registrar, who, being satisfied that the requirements of these regulations have been complied with, shall register them and shall cause without delay a statement to be published in the Gazette or on a website maintained by him.

The Registrar  shall  additionally  be  required  to  publish, without delay, in a daily newspaper circulating wholly or mainly in Malta. Such publication shall be made by the Registrar at the expense of the Maltese merging company or companies and the provisions of article 401(1)(e) of the Companies Act shall apply. The statements to be published shall include the date on which the registration of the extraordinary resolution  was  made,  together  with  a  reference  that  it was  passed  for  the  purpose  of  approving  the  cross-border merger, together wuth the type, name and registered office of every merging company.


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