Mergers and divisions of public companies to be made simpler
The Companies (Reporting Requirements in Mergers and Divisions) Regulations 2011 (the “Regulations”) have now been published, and will come into force on 1st August 2011, though do not apply to any merger or division the draft terms of which were adopted before that date.
The Regulations implement an EU directive intended to enhance the competitiveness of European companies by facilitating mergers and divisions.
The Regulations amend the regime for mergers and divisions of public companies set out in Part 27 of the Companies Act 2006. In particular, the changes are designed to:
- enable companies to take advantage of new technology: certain requirements regarding publishing information or making it available at the company’s registered office can instead be met by publishing the information on a website (provided that members are able to retain a copy), and certain obligations to send out information can be satisfied by email where the recipient has consented to this; and
- remove over-regulation: for example, a company is able in certain circumstances to dispense with formal steps generally required for a merger or division, including the preparation of specified reports and statements. The categories of report which can be dispensed with by unanimous agreement of the members of merging companies are also extended.
Cross-border mergers are facilitated by similar amendments being made to the Companies (Cross-Border Mergers) Regulations 2007.
However, creditor protections are not addressed in the Regulations as the existing UK regime is believed to meet the directive’s requirements already.