European Communities (Mergers and Divisions of Companies) Regulations, 1987

• Jurisdiction: Ireland
• Citation: IR SI 137/1987
• Year: 1987

S.I. No. 137 of 1987.
EUROPEAN COMMUNITIES (MERGERS AND DIVISIONS OF COMPANIES) REGULATIONS, 1987.
ARRANGEMENT OF REGULATIONS
PART I
Preliminary
Regulation
1. Citation and commencement.
2. Interpretation.
3. Penalties.
PART II
Mergers
4. Interpretation of Part II.
5. Mergers to which Part II applies.
6. Draft terms of merger.
7. Directors' explanatory report.
8. Independent person's report.
9. Accounting statement.
10. Companies (Amendment) Act, 1983 : sections 30 and 31 restricted.
11. Registration and publication of documents.
12. Inspection of documents.
13. General meetings of merging companies.
14. Meetings of classes of shareholder.
15. Purchase of minority shares.
16. Application for confirmation of merger by court.
17. Protection of creditors.
18. Preservation of rights of holders of securities.
19. Confirmation order.
20. Limitation on power of court to make orders.
21. Registration and publication of confirmation of merger.
22. Civil liability of directors and independent persons.
23. Criminal liability for false statements in merger documents.
PART III
Divisions
24. Interpretation of Part III.
25. Divisions to which Part III applies.
26. Draft terms of division.
27. Directors' explanatory report.
28. Independent person's report.
29. Accounting statement.
30. Registration and publication of documents.
31. Inspection of documents.
32. General meetings of the companies involved in a division.
33. Meetings of classes of shareholder.
34. Purchase of minority shares.
35. Application for confirmation of division by court.
36. Protection of creditors.
37. Preservation of rights of holders of securities.
38. Confirmation order.
39. Limitation on power of court to make orders.
40. Registration and publication of confirmation of division.
41. Civil liability of directors and independent persons.
42. Criminal liability for untrue statements in division documents.
S.I. No. 137 of 1987.
EUROPEAN COMMUNITIES (MERGERS AND DIVISIONS OF COMPANIES) REGULATIONS, 1987.
I, ALBERT REYNOLDS, Minister for Industry and Commerce, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972) and for the purpose of giving effect to Council Directive No. 78/855/EEC of 9 October, 19781 and No. 82/891/EEC of 17 December, 19822 hereby make the following Regulations:
PART I Preliminary
	1 Citation and commencement.	1. (1) These Regulations may be cited as the European Communities (Mergers and Divisions of Companies) Regulations, 1987.
(2) These Regulations shall be construed as one with the Companies Acts.
(3) These Regulations shall come into operation on the 1st day of June, 1987.
	2 Interpretation.	2. (1) In these Regulations, unless the context otherwise requires—
"the Act of 1963" means the Companies Act, 1963 ;
"the Companies Acts" means the Act of 1963 and every enactment (including these and other Regulations made under the European Communities Act, 1972 ) which is to be construed as one with that Act;
"company" means a public limited company, within the meaning of the Companies (Amendment) Act, 1983 , or a body corporate to which certain provisions of the Act of 1963 are applied by section 377 (1) of that Act;
1 O.J. No. L 295/36, 20.10.78.
2 O.J. No. L 378/47, 31.12.82.
"director", in relation to a company which is being wound up, means liquidator;
"division" has the meaning assigned to it by Regulation 24;
"merger" has the meaning assigned to it by Regulation 4;
"Minister" means the Minister for Industry and Commerce.
(2) In these Regulations a reference to any enactment shall, unless the context otherwise requires, be construed as a reference to that enactment as amended by any other enactment including these Regulations.
	3 Penalties.	3. A person convicted of an offence under these Regulations shall be liable, on summary conviction, to a fine not exceeding £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 12 months or both.
PART II Mergers
	4 Interpretation of Part II.	4. In this Part, unless the context otherwise requires—
"acquiring company", has the meaning assigned to it by Regulation 5;
"merger" means "merger by acquisition" or "merger by formation of a new company" within the meaning of Regulation 5 (1);
"merging company" means a company which is a party to a proposed merger.
	5 Mergers to which Part II applies.	5. (1) In this Part—
(a) "merger by acquisition" means an operation whereby an existing company ("the acquiring company") acquires all the assets and liabilities of another company or companies in exchange for the issue to the shareholders of the company or companies being acquired of shares in the acquiring company, with or without any cash payment, and with a view to the dissolution of the company or companies being acquired; and
(b) "merger by formation of a new company" means a similar operation where the acquiring company has been formed for the purpose of such acquisition.
(2) Where a company is being wound up it may—
(a) become a party to a merger by acquisition or by formation of a new company, provided that the distribution of its assets to its shareholders has not begun at the date, under Regulation 6 (4), of the draft terms of merger, or
(b) opt to avail of the provisions of sections 201 to 204, 260 and 271 of the Act of 1963.
(3) Subject to paragraph (2), the said provisions shall not apply to merger by acquisition or by formation of a new company.
	6 Draft terms of merger.	6. (1) Where a merger is proposed to be entered into, the directors of the merging companies shall draw up draft terms of the merger in writing.
(2) The draft terms of merger shall state, at least—
(a) the name and registered office of each of the merging companies;
(b) as to each of such companies, whether it is a public company limited by shares, a public company limited by guarantee and having a share capital or a body corporate to which section 377 (1) of the Act of 1963 relates;
(c) the proposed share exchange ratio and the amount of any cash payment;
(d) the proposed terms relating to allotment of shares in the acquiring company;
(e) the date from which holders of such shares will become entitled to participate in the profits of the acquiring company;
(f) the date from which the transactions of the company or companies being acquired shall be treated for accounting purposes as being those of the acquiring company;
(g) any special conditions, including special rights or restrictions, whether in regard to voting, participation in profits, share capital or otherwise, which will apply to shares or other securities issued by the acquiring company in exchange for shares or other securities in the company or companies being acquired;
(h) any payment or benefit in cash or otherwise, paid or given or intended to be paid or given to any independent person referred to in Regulation 8 and to any director of any of the merging companies insofar as it differs from the payment or benefit paid or given to other persons in respect of the merger and the consideration, if any, for any such payment or benefit.
(3) Where the merger is a merger by formation of a new company the draft terms of merger shall include or be accompanied by the memorandum or draft memorandum and the articles or draft articles of association of the new company.
(4) The draft terms of merger shall be signed and dated on behalf of each of the merging companies by two directors of each such company and that date shall, for the purposes of this Part, be the date of the draft terms of merger.
	7 Directors' explanatory report.	7. (1) A separate written report ("the explanatory report") shall be drawn up in respect of each of the merging companies by the directors of each such company.
(2) The explanatory report shall at least detail and explain—
(a) the draft terms of merger;
(b) the legal and economic grounds for and implications of the draft terms of merger with particular reference to the proposed share exchange ratio, organisation and management structures, recent and future commercial activities and the financial interests of the holders of the shares and other securities in the company;
(c) the methods used to arrive at the proposed share exchange ratio and the reasons for the use of these methods;
(d) any special valuation difficulties which have arisen.
(3) The explanatory report shall be signed and dated on behalf of each of the merging companies by two directors of each such company.
	8 Independent person's report.	8. (1) Each of the merging companies shall appoint an independent person to examine the draft terms of merger and to prepare a written report on them to the shareholders of the company concerned.
(2) No person shall act as an independent person for the purposes of paragraph (1) unless he is authorised by the Minister on application by the company concerned to be such a person for the purposes of the proposed merger.
(3) One or more independent persons may be authorised by the Minister on joint application by the merging companies for all the said companies.
(4) None of the following persons shall be qualified to act as an independent person in respect of a proposed merger—
(a) a person who is or, within 12 months of the date of the draft terms of merger, has been, an officer or servant of the company;
(b) except with the leave of the Minister, a parent, spouse, brother, sister or child of an officer of the company;
(c) a person who is a partner or in the employment of an officer or servant of the company.
(5) If an independent person becomes disqualified by virtue of this regulation he shall thereupon cease to hold office and shall give notice in writing of...