Cross-Border Mergers And The Impact Of Brexit

Author:Mr Padraic Roche
Profession:Matheson
 
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A legal framework to permit cross-border mergers between limited liability companies from member states in the European Economic Area ("EEA") was brought into European law by Directive 2005/56/EC ( the "Directive"). The Directive was implemented in Ireland by the European Communities (Cross-Border Mergers) Regulations 2008 (the "Regulations"). The Regulations have provided a legal framework over the past 10 years for cross-border mergers into and out of Ireland. By way of re-cap, in a cross-border merger all the assets and liabilities of one or more companies (a "Transferor") are automatically transferred to another company (a "Successor") and the Transferor is dissolved without going into liquidation. For the Regulations to apply, the merger must involve at least one Irish limited liability company and at least one EEA company. The question which currently presents itself in the context of Brexit is, what is the possibility of an Irish company undertaking a cross-border merger into the UK in the event of a Hard Brexit (and indeed, the possibility of a UK company merging into an Irish company in such a scenario).

Part of the prescribed procedure as set out in the Regulations and the relevant UK regulations, the Companies (Cross-Border Mergers) Regulations 2007 (the "UK Regulations"), involves obtaining a pre-merger certificate from both the High Court in Ireland and the High Court in the UK. Subsequently the merging entities apply to the High Court in the jurisdiction of the Successor for an order confirming the merger and its effective date (the "Court Order"). For merging companies with no employees the full process of an Ireland/UK cross-border merger is likely to take in the region of 4 to 6 months.

As things currently stand, in the event of a Hard Brexit on 29 March 2019, Irish companies will not be able to...

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