A new procedure for the merger of Irish companies was introduced by the Companies Act 2014. Over 60 mergers have been completed and over 100 companies have been dissolved under this regime so far. It is proving to be a successful and positive addition to Irish company law.
The Companies Act 2014 (the "Act") introduced a number of significant reforms to Irish company law. One reform was the introduction of a statutory procedure for the merger of two Irish companies. It is now possible to transfer by operation of law all of the assets and liabilities of one Irish company to another Irish company, and then dissolve the former company.
Types of domestic merger introduced by the Act
The Act provides three ways of effecting such a merger:
Merger by acquisition - where a company acquires all of the assets and liabilities of one or more companies in exchange for the issue of shares in the acquiring company to the members of the acquired companies, with or without cash payment. The acquired company is then dissolved without going into liquidation Merger by absorption - an existing company acquires all the assets and liabilities of its wholly-owned subsidiary and the subsidiary is dissolved without going into liquidation Merger by formation - where companies transfer all of their assets and liabilities into a newly formed company in exchange for the issue of shares in the newly-formed company to the members of the existing companies with or without cash payment. The acquired companies are then dissolved without going into liquidation Types of company that can merge
Provided that one of the merging companies is a private company limited by shares, all company types, except for public limited companies ("PLC"), can use the above legal regime to effect each of the above types of merger. A PLC can only be a successor company in a merger by formation and cannot be a company in the other types of merger. A different legal regime applies to a PLC merging by acquisition or by absorption.
The process involves
The directors of the companies involved agreeing common draft terms of merger The directors of the merging companies preparing an explanatory report, save for a merger by absorption The appointment of an expert to prepare a report for the members of the merging companies on the common draft terms of the merger, save for a merger by...