Cross-Border Mergers of Limited Liability Companies
When talking about mergers we essentially refer to the act performed by several companies through which two or more limited liability companies by shares (the acquired companies) merge into one already existing company (the acquiring company) and such a process requires the approval of the court.
For intra-group cross-border mergers the procedures in Cyprus are simplified thus attracting a great deal of foreign investments.
Law N.186(I)/2007 has inserted new provisions in the Cyprus Companies Law, Cap113, bringing the same in line with the provisions of Directive 2005/56/EC on cross border mergers of limited liability companies, thus allowing cross-border mergers between Cypriot and EU companies. EC Directive 2005/56/EC has introduced a uniform and simplified procedure in order to pursue cross-border mergers between companies incorporated under the laws of Member States and having their registered office, central administration or principal place of business within the Community.
Summary of procedure for a cross-border merger
Provided that the members of the Company approve the cross border merger plan, the Company must make an application to court with a supporting affidavit, in order to obtain the issue by the Court of a certificate (in the form of a court order) which states indisputably that the pre-merger acts and formalities have taken place and are satisfied. A similar pre-merger certificate must be obtained by each merging non-Cypriot company in its own jurisdiction.
Within 6 months of the issue of the Pre-Merger Certificate a second application must be made to Court together with a supporting affidavit for further examination where the Court should examine whether the merging companies approved the common cross border merger plan under the same conditions, and if the methods of participation of the employees of the merging Cyprus Company have been followed.
Essentially, if the court is satisfied as to the legality of the procedures followed for the completion of the cross-border merger, the Court shall issue a Court Order approving completion of the merger and setting a date on which the cross-border merger shall be deemed to take effect.
A share acquisition as such, refers to the procedure whereby the acquiring shareholder acquires all or part of the shares of the target company, a process which involves drafting and negotiating joint venture agreements, subscription agreements and shareholders agreements governing the management and operation of the acquired company.
Our firm has participated in a significant number of merger & acquisition transactions in Cyprus and abroad. Our expertise in this area includes:
- Structuring and control of share acquisitions
- Advising on various aspects of acquisition finance
- Drafting and negotiating joint venture agreement, subscription and shareholders agreements
- Structuring leveraged and management buyouts
- General legal advice on corporate, competition, labour and enforcement matters
- Specialised advice in relation to public company M&A transactions on Cyprus Securities and Exchange Commission legislation, on various regulatory matters such as the takeover bids codes, transparency requirements, market abuse and other securities related matters
For more detailed information, contact our team of specialists at Parparinos Milonas Corporate and Legal Consultants.