A merger can help raise a company's profile and its competitiveness through increased competition in the EU market. It can allow companies to expand into new markets, develop new products or restructure themselves, reducing production and distribution costs. However, mergers can also be damaging for competition, for instance by creating or strengthening a dominant market player and distorting fair competition.
The main legislation governing mergers between companies all of which are registered in Malta is the Companies Act.
Types of merger
One may take over a business through simple amalgamation between two or more commercial partnerships, or through amalgamation of companies which may entail a merger by acquisition, or by forming a new company.
The directors of the amalgamating companies are required to draw up draft terms of merger which must be signed by at least one director and the company secretary of each of the amalgamating companies, and forwarded to the Registrar of Companies for registration. The merger must be approved by an extraordinary resolution of each of the amalgamating companies. The Companies Act contains provisions for the protection of the shareholders, creditors and other securities holders of the amalgamating companies.
The Companies Act also provides for a process of takeover of companies, namely where the assets and liabilities of one or more companies are delivered to another company which is the holder of 90% or more or their shares.
Cross-Border Mergers of Limited Liability Companies Regulations 2007
The Cross-Border Mergers of Limited Liability Companies Regulations apply to mergers of companies:
- formed in accordance with the law of a Member State and
- having their registered office, central administration or principal place of business within the Community.
However, at least two of such companies are governed by the laws of different Member States and that at least one of the merging companies, or the company resulting from the merger, is registered in Malta.
The Regulations provide for a specific procedure which must be complied with by cross-border merging companies. After verifying that each Maltese merging company has complied with the requirements prescribed in the Regulations and all documentation has been submitted, the Registrar will, issue to every Maltese merging company a Cross-Border Pre-Merger Certificate conclusively attesting to the proper completion of the pre-merger acts and formalities.
Where the company resulting from the cross-border merger has or is to have its registered office in Malta, the Registrar of Companies will scrutinise the legal validity of the cross-border merger in order to ensure that the merging companies have approved the common draft terms of cross-border merger on the same terms and the new company has been validly formed. The contents of the terms of the cross-border merger are prescribed in the Regulations. These shall be signed by at least one director and the company secretary of such company or companies.
On being satisfied that the requirements prescribed in the Regulations have been complied with and any fees have been paid the Registrar of Companies will issue a certificate of completion of cross-border merger.
These Regulations can be downloaded from the Justice Website at the following link:
Buying an existing company, with an already established structure, can be a good way of expanding your business.
Malta Enterprise provides a number of incentives for foreign direct investors and local enterprises demonstrating commitment towards growth and increase in value added and employment. More specifically, these incentives are designed to support and aid enterprises to expand their business, invest in research and development, innovate their processes, tap into EU funds, develop their international competitiveness potential and to network with other enterprises.