The European Communities (Cross-Border Mergers) Regulations 2008 (implementing Directive 2005/56/EC on Cross-Border Mergers) facilitate mergers between Irish companies and those located elsewhere in the European Union (and those EEA States that have implemented the Directive). European limited companies that are capable of merger under national law can merge into Irish registered companies or vice versa, with the merging company ceasing to exist on completion of the merger. The Regulations permitted true "mergers" for the first time under Irish law, providing a new way for Irish public and private limited companies to make or receive a transfer of assets and liabilities to or from companies in other European/EEA jurisdictions.
What types of merger are permitted?
Merger by Absorption: where a subsidiary is absorbed into its parent company. Merger by Acquisition: where an existing company acquires all the assets and liabilities of one or more transferor companies in exchange for the issue to the shareholders of the transferor companies of shares or securities in the acquiring company (with or without a cash payment). Merger by Formation of a New Company: where two or more companies transfer all their assets and liabilities to a successor company formed for that purpose in exchange for the issue to their shareholders of shares or securities in the successor company (with or without a cash payment). What are the benefits of a cross-border merger?
The Cross-Border Mergers Directive creates a harmonised and simplified procedure for cross-border mergers eliminating the need for individual transfer documents typical under the traditional business sale and purchase model. A cross-border merger results in each transferor company being dissolved without going into liquidation, thus avoiding the publicity, delay and expense of a liquidation. All of the assets and liabilities (including legal proceedings, employment contracts and other contracts, agreements or instruments) of the transferor companies are transferred to the surviving company by operation of law. A cross-border merger can be used to reduce the number of legal entities and streamline corporate governance obligations and compliance costs within a corporate group. The transfer of assets and liabilities under a cross-border merger should be broadly neutral from an Irish tax perspective and may have the advantage of increasing the possibility of claiming tax relief for losses that...