Current Regime applicable to mergers
Under the European Communities (Cross-Border Mergers) Regulations 2008 (the “CBM Regulations”) Irish private companies are currently only permitted to merge with a company incorporated in another state within the European Economic Area (the EEA). Such mergers provide for the transfer by operation of law of the assets and liabilities of a company located in one EEA state to a company located in another EEA state. All applications by Irish companies to effect a cross-border merger are made to the High Court.
New regime applicable to mergers
Part 9 of the Act now provides for a new regime whereby two Irish private companies can merge. The procedure is modelled on the CBM Regulations applicable to cross-border mergers and allows for merger by:
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Acquisition – One company acquires the assets and liabilities of one or more companies which is/are dissolved without going into liquidation. The acquiring company issues shares to the members of the dissolved company/companies in consideration of the transaction.
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Absorption – a parent company absorbs the assets and liabilities of a wholly owned subsidiary, which is dissolved without going into liquidation.
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Formation of a new company – a newly incorporated company acquires the assets and liabilities of one or more companies, which is/are dissolved without going into liquidation. The acquiring company issues shares to the members of the dissolved company/companies in consideration of the transaction.
Effecting Mergers under the New Regime
Mergers under Part 9 of the Act can be effected by either court order confirming the merger or by using a new Summary Approvals Procedure (the SAP) established under the Act. Under the SAP, the directors (or a majority of them) of each merging company swear a declaration in respect of the post merger solvency of the successor company. No later than 30 days thereafter, the members of each merging company must pass a unanimous special resolution approving the common draft terms of the merger.
The availability of the SAP is a welcome development to corporate restructuring, as it will lead to a reduction in the costs and time taken to implement the merger. The SAP is not available where one of the companies is a plc and in such instance an application must be made to the High Court.
About the author
Edward Evans
About Edward
Edward is a partner in our corporate & commercial team. Edward works with a range of domestic and international clients in various industries sectors including sports, banking and insurance, software, retail and manufacturing, distribution and logistics.
Edward has extensive experience in corporate and commercial legal issues – including mergers and acquisitions, commercial contracts, complex cross border restructurings and all aspects of financial services – and regulatory law.