The Companies (Cross-Border Mergers) Regulations 2007

Independent expert’s report

9.—(1) A report must be drawn up in accordance with this regulation, unless—

(a) the cross-border merger is a merger by absorption of a wholly-owned subsidiary;

(b) the cross-border merger is a merger by absorption where 90% or more (but not all) of the relevant securities of the transferor company (or, if there is more than one transferor company, of each of them) are held by or on behalf of the transferee company; or

(c) every member of every merging company agrees that such a report is not required.

(2) The report must be prepared by—

(a) an independent expert who has been appointed for the UK merging company by its directors;

(b) an independent expert who has been appointed for all the merging companies by the court in accordance with paragraph (3); or

(c) a person who has been appointed for all the merging companies for the purposes of Article 8 (independent expert’s report) of the Directive by a competent authority of another EEA State.

(3) The court may, on the joint application of all the merging companies, order the appointment of an independent expert to prepare a report for those companies in accordance with this regulation.

(4) Where it appears to an independent expert that a valuation is reasonably necessary to enable him to draw up the report, and it appears to him to be reasonable for that valuation, or part of it, to be made by another person who—

(a) appears to him to have the requisite knowledge and experience to make the valuation or that part of it, and

(b) is independent,

he may arrange for such a valuation (or accept one which has already been made), together with a report which will enable him to prepare his own report in accordance with this regulation.

(5) In the report the independent expert must—

(a) indicate—

(i) the methods used to arrive at the share exchange ratio; and

(ii) the values arrived at using each such method;

(b) describe any special valuation difficulties which have arisen;

(c) give an opinion—

(i) as to whether the methods used are reasonable in all the circumstances of the case;

(ii) if there is more than one method, on the relative importance attributed to each method in arriving at the value decided on; and

(iii) as to whether the share exchange ratio is reasonable;

(d) in the case of a valuation made by another person in accordance with paragraph (4)—

(i) state that fact and the date of the valuation;

(ii) state the person’s name and what knowledge and experience he has to carry out the valuation;

(iii) describe so much of the assets and liabilities as was valued by the other person, and the method used to value them; and

(iv) state that it appeared to himself reasonable to arrange for the valuation to be so made or to accept a valuation so made.

(6) The independent expert has the right—

(a) of access to all such documents of every merging company; and

(b) to require from the companies’ officers all such information,

as he thinks necessary for the purpose of making his report.

(7) In this regulation, “independent expert” means a person who—

(a) is eligible for appointment as a statutory auditor in accordance with section 1212 of the Companies Act 2006(1) (eligibility for appointment as statutory auditor), and

(b) is independent.

(8) For the purposes of this regulation—

(a) a person is not independent if, by virtue of section 1214 of the Companies Act 2006 (independence requirement for statutory auditor), he would not be able to act as statutory auditor of all the merging companies; and

(b) section 1214 of the Companies Act 2006 applies in relation to all the merging companies as if they were companies in respect of which a person must be appointed as auditor under Part 16 of that Act (audit of companies).

(9) In this regulation “relevant securities”, in relation to a transferor company, means shares or other securities carrying the right to vote at general meetings of the company.

(1)

2006 c.46.