Cross-border conversion, mergers and divisions - Step by step process

The EU Mobility Directive introduced a harmonised set of rules on cross-border conversions and cross-border divisions and clarifies the existing rules on cross-border mergers within the EU. With the transposition of the directive into national legislation, European companies have much greater mobility.

Irish companies should adhere to the following step-by-step process when considering cross-border conversions, mergers or divisions.

1. Adoption of Draft Terms by the directors of the company/companies with details including the updated constitution, the timeline and assessment of the impact on employees, shareholders and creditors.

2. Preparation of a Directors’ Explanatory Report which outlines the legal and economic reasons for the change, as well as an assessment of the impact on the future of the business.

3. Appointment of auditors to draft an Experts’ Report which examines the impact on the members of the business.

4. Registration of the Draft Terms, including a notification of the members, creditors and employees and a notice of conversion with the (Company Registrations Office) CRO. In lieu of a notification to the members, creditors and employees, the information may instead be published on the company website. Notice of registration of draft terms and a notice inviting comments must be published in a national newspaper and the CRO Gazette.

5. Arrangement of a General Meeting¸ wherein the members must approve the draft terms and the updated constitution. Any shareholder who votes against the resolution can request the company acquire their shares. If they are unsatisfied with the compensation offered, they may appeal to the High Court. Creditors may also apply to the High Court if they are unhappy with the safeguards proposed in the draft terms.

6. Application for a Pre-Conversion Certificate from the High Court. This will be issued pending an examination by the High Court of the application to ensure the certificate is not being sought for abusive, fraudulent, or criminal purposes.

7. Transfer and examination of certification by relevant authorities in other EEA states who will then issue an order providing an effective date of the change.

For further information please contact Ronan Donohoe, Head of Company Secretarial.