The Companies (Cross-Border Mergers) Regulations 2007

PART 1 GENERAL

Citation and commencement

1.  These Regulations may be cited as the Companies (Cross-Border Mergers) Regulations 2007 and come into force on 15th December 2007.

Meaning of “cross-border merger”

2.—(1) In these Regulations “cross-border merger” means a merger by absorption, a merger by absorption of a wholly-owned subsidiary, or a merger by formation of a new company.

(2) In these Regulations “merger by absorption” means an operation in which—

(a) there are one or more transferor companies;

(b) there is an existing transferee company;

(c) at least one of those companies is a UK company;

(d) at least one of those companies is an EEA company;

(e) every transferor company is dissolved without going into liquidation, and on its dissolution transfers all its assets and liabilities to the transferee company; and

(f) the consideration for the transfer is—

(i) shares or other securities representing the capital of the transferee company, and

(ii) if so agreed, a cash payment,

receivable by members of the transferor company.

(3) In these Regulations “merger by absorption of a wholly-owned subsidiary” means an operation in which—

(a) there is one transferor company, of which all the shares or other securities representing its capital are held by an existing transferee company;

(b) either the transferor company or the transferee company is a UK company;

(c) either the transferor company or the transferee company is an EEA company; and

(d) the transferor company is dissolved without going into liquidation, and on its dissolution transfers all its assets and liabilities to the transferee company.

(4) In these Regulations “merger by formation of a new company” means an operation in which—

(a) there are two or more transferor companies, at least two of which are each governed by the law of a different EEA State;

(b) every transferor company is dissolved without going into liquidation, and on its dissolution transfers all its assets and liabilities to a transferee company formed for the purposes of, or in connection with, the operation;

(c) the consideration for the transfer is—

(i) shares or other securities representing the capital of the transferee company, and

(ii) if so agreed, a cash payment,

receivable by members of the transferor company;

(d) at least one of the transferor companies or the transferee company is a UK company.

Interpretation

3.—(1) In these Regulations—

“the 1996 Act” means the Employment Rights Act 1996(1);

“the Appeal Tribunal” means the Employment Appeal Tribunal;

“the CAC” means the Central Arbitration Committee;

“the Companies Acts” has the same meaning as in section 2 of the Companies Act 2006;

“competent authority of another EEA State” means a court or other authority designated in accordance with the law of an EEA State other than the United Kingdom as competent for the purposes of Article 8 (appointment of independent expert), Article 10 (issue of pre-merger certificate) or Article 11 (scrutiny of completion of merger) of the Directive;

“the court” means—

(a)

in England and Wales, the High Court,

(b)

in Scotland, the Court of Session, or

(c)

in Northern Ireland, the High Court;

“the Directive” means Directive 2005/56/EC on cross-border mergers of limited liability companies(2);

“director” has the same meaning as in the Companies Acts (see section 250 of the Companies Act 2006);

“directors’ report” means a report prepared and adopted in accordance with regulation 8 (directors’ report), and includes any opinion of the employee representatives which must accompany it in accordance with regulation 8(6);

“dismissed” and “dismissal”, in relation to an employee, shall be construed in accordance with Part 10 of the 1996 Act;

“draft terms of merger” means a draft of the proposed terms of a cross-border merger drawn up and adopted in accordance with regulation 7 (draft terms of merger);

“EEA company” means a body corporate governed by the law of an EEA State other than the United Kingdom;

“employee” means an individual who has entered into or works under a contract of employment and includes, where the employment has ceased, an individual who worked under a contract of employment;

“employee participation” means the influence of the employees and/or the employee representatives in the transferee company or a merging company by way of the right to—

(a)

elect or appoint some of the members of the transferee company’s or the merging company’s supervisory or administrative organ; or

(b)

recommend and/or oppose the appointment of some or all of the members of the transferee’s or the merging company’s supervisory or administrative organ;

“employee representatives” means—

(a)

if the employees are of a description in respect of which an independent trade union is recognised by their employer for the purpose of collective bargaining, representatives of the trade union who normally take part as negotiators in the collective bargaining process, and

(b)

any other employees of their employer who are elected or appointed as employee representatives to positions in which they are expected to receive, on behalf of the employees, information—

(i)

which is relevant to the terms and conditions of employment of the employees, or

(ii)

about the activities of the undertaking which may significantly affect the interests of the employees,

but excluding representatives who are expected to receive information relevant only to a specific aspect of the terms and conditions or interests of the employees, such as health and safety, collective redundancies, or pension schemes;

“existing transferee company” means a transferee company other than one formed for the purposes of, or in connection with, a cross-border merger;

“First Company Law Directive” means First Council Directive on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community (68/151/EEC)(3);

“the Gazette” means—

(a)

as respects UK companies registered in England and Wales, the London Gazette,

(b)

as respects UK companies registered in Scotland, the Edinburgh Gazette, and

(c)

as respects UK companies registered in Northern Ireland, the Belfast Gazette;

“independent expert’s report” means a report prepared in accordance with regulation 9 (independent expert’s report);

“liabilities” includes duties;

“member” in relation to a UK company has the same meaning as in the Companies Acts (see section 112 of the Companies Act 2006);

“registrar of companies” has the same meaning as in the Companies Acts (see section 1060 of the Companies Act 2006);

“share exchange ratio” means the number of shares or other securities in any transferee company that the draft terms of merger provide to be allotted to members of any transferor company for a given number of their shares or other securities;

“standard rules of employee participation” means the rules in regulation 38;

“transferee company” means a UK company or an EEA company to which assets and liabilities are to be transferred by way of a cross-border merger;

“transferor company” means a UK company or an EEA company whose assets and liabilities are to be transferred by way of a cross-border merger;

“treasury shares” has the same meaning as in the Companies Acts (see section 724 of the Companies Act 2006);

“UK company” means a company within the meaning of the Companies Acts (see section 1 of the Companies Act 2006) other than—

(a)

a company limited by guarantee without a share capital (see section 5 of the Companies Act 2006), or

(b)

a company being wound up;

“UK employee” means an employee who has entered into or works under a contract of employment with a UK company;

“UK members of the special negotiating body” means members of the special negotiating body, established pursuant to regulation 25, elected or appointed by UK employees; and

“the UK register” means the register within the meaning of the Companies Acts (see section 1080 of the Companies Act 2006).

(2) References in these Regulations to “the merging companies” are—

(a) in relation to a merger by absorption or a merger by absorption of a wholly-owned subsidiary, to the transferor company or companies and the existing transferee company;

(b) in relation to a merger by formation of a new company, to the transferor companies.

(3) References in these Regulations to—

(a) “a UK merging company” are to a merging company which is a UK company;

(b) “a UK transferee company” are to a transferee company which is a UK company;

(c) “a UK transferor company” are to a transferor company which is a UK company.

The Companies Act 2006

4.—(1) The following provisions of the Companies Act 2006(4) apply for the purposes of these Regulations as they apply for the purposes of the Companies Acts—

(a) section 1081 (annotation of the register);

(b) sections 1102 to 1104 and 1107 (language requirements for documents delivered to registrar);

(c) section 1112 (offence of false statement to registrar);

(d) section 1113 (enforcement of company’s filing obligations);

(e) sections 1121 to 1123 (liability of officer in default);

(f) section 1125 (meaning of “daily default fine”);

(g) sections 1127 and 1128 (summary proceedings);

(h) section 1129 (legal professional privilege);

(i) section 1130 (proceedings against unincorporated bodies).

(2) Section 1063 of the Companies Act 2006 (fees payable to registrar) applies to the functions conferred on the registrar of companies by these Regulations as it applies to the functions conferred on the registrar of companies by the Companies Acts.

(3) Section 1105 of the Companies Act 2006 (documents that may be drawn up and delivered in other languages) applies to the documents required to be delivered to the registrar of companies under—

(a) regulation 12(1)(b) (draft terms of merger), and

(b) regulation 19(3) (order of competent authority of another EEA State).

(4) The facility described in section 1106 of the Companies Act 2006 (voluntary filing of translations) is available in relation to—

(a) all official languages of EEA States, and

(b) all documents required to be delivered to the registrar of companies under these Regulations.

(5) In article 4(1) of the Companies Act 2006 (Commencement No. 3, Consequential Amendments, Transitional Provisions and Savings) Order 2007(5) (commencement of section 1068 of the Companies Act 2006) for the words from “any regulations made” to the end substitute “the Companies (Cross-Border Mergers) Regulations 2007”.

(6) Schedule 1 makes transitional modifications to provisions of these Regulations that refer to provisions of the Companies Act 2006 that are not yet in force.

Unregistered companies

5.—(1) These Regulations apply to an unregistered company as they apply to a UK company.

(2) In the application of these Regulations to an unregistered company any reference to—

(a) a UK company’s registered office shall be read as a reference to the unregistered company’s principal office in the United Kingdom;

(b) a part of the United Kingdom in which a UK company is registered shall be read as a reference to the part of the United Kingdom in which the unregistered company’s principal office is situated and “Gazette” and “registrar of companies” shall be construed accordingly (see regulation 3(1)).

(3) In the application of these Regulations to an unregistered company, regulation 12(1)(c) applies with the omission of item (iv) (duty to state company’s registered number).

(4) In this regulation “unregistered company” means a body to which section 1043 of the Companies Act 2006 (unregistered companies) applies.

(1)

1996 c.18.

(2)

OJ L 310, 25.11.2005, p. 1. The Directive extends to the European Economic Area by virtue of Decision of the EEA Joint Committee No. 127/2006 of 22 September 2006 amending Annex XXII (Company law) to the EEA Agreement (OJ L 333, 30.11.2006, p. 59).

(3)

OJ L 65, 14.3.1968, p. 8. The Directive has been amended on a number of occasions, but the only amendments relevant to the United Kingdom are those made by Directive 2003/58/EC of the European Parliament and of the Council of 15 July 2003 (OJ L 221, 4.9.2003, p. 13).

(4)

2006 c.46.

(5)

S.I. 2007/2194 (C. 84).