PART 1 GENERAL

Citation and commencement

1.  These Regulations may be cited as the Companies (Cross-Border Mergers) Regulations 2007 and come into force on 15th December 2007.

Meaning of “cross-border merger”

2.—(1) In these Regulations “cross-border merger” means a merger by absorption, a merger by absorption of a wholly-owned subsidiary, or a merger by formation of a new company.

(2) In these Regulations “merger by absorption” means an operation in which—

(a) there are one or more transferor companies;

(b) there is an existing transferee company;

(c) at least one of those companies is a UK company;

(d) at least one of those companies is an EEA company;

(e) every transferor company is dissolved without going into liquidation, and on its dissolution transfers all its assets and liabilities to the transferee company; and

(f) the consideration for the transfer is—

(i) shares or other securities representing the capital of the transferee company, and

(ii) if so agreed, a cash payment,

receivable by members of the transferor company.

(3) In these Regulations “merger by absorption of a wholly-owned subsidiary” means an operation in which—

(a) there is one transferor company, of which all the shares or other securities representing its capital are held by an existing transferee company;

(b) either the transferor company or the transferee company is a UK company;

(c) either the transferor company or the transferee company is an EEA company; and

(d) the transferor company is dissolved without going into liquidation, and on its dissolution transfers all its assets and liabilities to the transferee company.

(4) In these Regulations “merger by formation of a new company” means an operation in which—

(a) there are two or more transferor companies, at least two of which are each governed by the law of a different EEA State;

(b) every transferor company is dissolved without going into liquidation, and on its dissolution transfers all its assets and liabilities to a transferee company formed for the purposes of, or in connection with, the operation;

(c) the consideration for the transfer is—

(i) shares or other securities representing the capital of the transferee company, and

(ii) if so agreed, a cash payment,

receivable by members of the transferor company;

(d) at least one of the transferor companies or the transferee company is a UK company.

Interpretation

3.—(1) In these Regulations—

“the 1996 Act” means the Employment Rights Act 1996(5);

“the Appeal Tribunal” means the Employment Appeal Tribunal;

“the CAC” means the Central Arbitration Committee;

“the Companies Acts” has the same meaning as in section 2 of the Companies Act 2006;

“competent authority of another EEA State” means a court or other authority designated in accordance with the law of an EEA State other than the United Kingdom as competent for the purposes of Article 8 (appointment of independent expert), Article 10 (issue of pre-merger certificate) or Article 11 (scrutiny of completion of merger) of the Directive;

“the court” means—

“the Directive” means Directive 2005/56/EC on cross-border mergers of limited liability companies(6);

“director” has the same meaning as in the Companies Acts (see section 250 of the Companies Act 2006);

“directors’ report” means a report prepared and adopted in accordance with regulation 8 (directors’ report), and includes any opinion of the employee representatives which must accompany it in accordance with regulation 8(6);

“dismissed” and “dismissal”, in relation to an employee, shall be construed in accordance with Part 10 of the 1996 Act;

“draft terms of merger” means a draft of the proposed terms of a cross-border merger drawn up and adopted in accordance with regulation 7 (draft terms of merger);

“EEA company” means a body corporate governed by the law of an EEA State other than the United Kingdom;

“employee” means an individual who has entered into or works under a contract of employment and includes, where the employment has ceased, an individual who worked under a contract of employment;

“employee participation” means the influence of the employees and/or the employee representatives in the transferee company or a merging company by way of the right to—

“employee representatives” means—

but excluding representatives who are expected to receive information relevant only to a specific aspect of the terms and conditions or interests of the employees, such as health and safety, collective redundancies, or pension schemes;

“existing transferee company” means a transferee company other than one formed for the purposes of, or in connection with, a cross-border merger;

“First Company Law Directive” means First Council Directive on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community (68/151/EEC)(7);

“the Gazette” means—

“independent expert’s report” means a report prepared in accordance with regulation 9 (independent expert’s report);

“liabilities” includes duties;

“member” in relation to a UK company has the same meaning as in the Companies Acts (see section 112 of the Companies Act 2006);

“registrar of companies” has the same meaning as in the Companies Acts (see section 1060 of the Companies Act 2006);

“share exchange ratio” means the number of shares or other securities in any transferee company that the draft terms of merger provide to be allotted to members of any transferor company for a given number of their shares or other securities;

“standard rules of employee participation” means the rules in regulation 38;

“transferee company” means a UK company or an EEA company to which assets and liabilities are to be transferred by way of a cross-border merger;

“transferor company” means a UK company or an EEA company whose assets and liabilities are to be transferred by way of a cross-border merger;

“treasury shares” has the same meaning as in the Companies Acts (see section 724 of the Companies Act 2006);

“UK company” means a company within the meaning of the Companies Acts (see section 1 of the Companies Act 2006) other than—

“UK employee” means an employee who has entered into or works under a contract of employment with a UK company;

“UK members of the special negotiating body” means members of the special negotiating body, established pursuant to regulation 25, elected or appointed by UK employees; and

“the UK register” means the register within the meaning of the Companies Acts (see section 1080 of the Companies Act 2006).

(2) References in these Regulations to “the merging companies” are—

(a) in relation to a merger by absorption or a merger by absorption of a wholly-owned subsidiary, to the transferor company or companies and the existing transferee company;

(b) in relation to a merger by formation of a new company, to the transferor companies.

(3) References in these Regulations to—

(a) “a UK merging company” are to a merging company which is a UK company;

(b) “a UK transferee company” are to a transferee company which is a UK company;

(c) “a UK transferor company” are to a transferor company which is a UK company.

The Companies Act 2006

4.—(1) The following provisions of the Companies Act 2006(8) apply for the purposes of these Regulations as they apply for the purposes of the Companies Acts—

(a) section 1081 (annotation of the register);

(b) sections 1102 to 1104 and 1107 (language requirements for documents delivered to registrar);

(c) section 1112 (offence of false statement to registrar);

(d) section 1113 (enforcement of company’s filing obligations);

(e) sections 1121 to 1123 (liability of officer in default);

(f) section 1125 (meaning of “daily default fine”);

(g) sections 1127 and 1128 (summary proceedings);

(h) section 1129 (legal professional privilege);

(i) section 1130 (proceedings against unincorporated bodies).

(2) Section 1063 of the Companies Act 2006 (fees payable to registrar) applies to the functions conferred on the registrar of companies by these Regulations as it applies to the functions conferred on the registrar of companies by the Companies Acts.

(3) Section 1105 of the Companies Act 2006 (documents that may be drawn up and delivered in other languages) applies to the documents required to be delivered to the registrar of companies under—

(a) regulation 12(1)(b) (draft terms of merger), and

(b) regulation 19(3) (order of competent authority of another EEA State).

(4) The facility described in section 1106 of the Companies Act 2006 (voluntary filing of translations) is available in relation to—

(a) all official languages of EEA States, and

(b) all documents required to be delivered to the registrar of companies under these Regulations.

(5) In article 4(1) of the Companies Act 2006 (Commencement No. 3, Consequential Amendments, Transitional Provisions and Savings) Order 2007(9) (commencement of section 1068 of the Companies Act 2006) for the words from “any regulations made” to the end substitute “the Companies (Cross-Border Mergers) Regulations 2007”.

(6) Schedule 1 makes transitional modifications to provisions of these Regulations that refer to provisions of the Companies Act 2006 that are not yet in force.

Unregistered companies

5.—(1) These Regulations apply to an unregistered company as they apply to a UK company.

(2) In the application of these Regulations to an unregistered company any reference to—

(a) a UK company’s registered office shall be read as a reference to the unregistered company’s principal office in the United Kingdom;

(b) a part of the United Kingdom in which a UK company is registered shall be read as a reference to the part of the United Kingdom in which the unregistered company’s principal office is situated and “Gazette” and “registrar of companies” shall be construed accordingly (see regulation 3(1)).

(3) In the application of these Regulations to an unregistered company, regulation 12(1)(c) applies with the omission of item (iv) (duty to state company’s registered number).

(4) In this regulation “unregistered company” means a body to which section 1043 of the Companies Act 2006 (unregistered companies) applies.

PART 2 PRE-MERGER REQUIREMENTS

Court approval of pre-merger requirements

6.—(1) A UK merging company may apply to the court for an order certifying for the purposes of Article 10.2 of the Directive (issue of pre-merger certificate) that the company has completed properly the pre-merger acts and formalities for the cross-border merger.

(2) The court must not make such an order unless the requirements of regulations 7 to 10 and 12 to 15 (pre-merger requirements) have been complied with.

Draft terms of merger

7.—(1) The directors of the UK merging company must draw up and adopt a draft of the proposed terms of the cross-border merger.

(2) The draft must give particulars of at least the following matters—

(a) in relation to each transferor company and transferee company—

(i) its name,

(ii) its registered office, and

(iii) its legal form and the law by which it is governed;

(b) the share exchange ratio and the amount of any cash payment;

(c) the terms relating to the allotment of shares or other securities in the transferee company;

(d) the likely effects of the cross-border merger for employees of each merging company;

(e) the date from which the holding of shares or other securities in the transferee company will entitle the holders to participate in profits, and any special conditions affecting that entitlement;

(f) the date from which the transactions of the transferor companies are to be treated for accounting purposes as being those of the transferee company;

(g) any rights or restrictions attaching to shares or other securities in the transferee company to be allotted under the cross-border merger to the holders of shares or other securities in a transferor company to which any special rights or restrictions attach, or the measures proposed concerning them;

(h) any amount or benefit paid or given or intended to be paid or given to the independent expert referred to in regulation 9 (independent expert’s report) or to any director of a merging company, and the consideration for the payment of benefit;

(i) the transferee company’s articles of association, or if it does not have articles, the instrument constituting the company or defining its constitution;

(j) information on the procedures by which any employee participation rights are to be determined in accordance with Part 4 of these Regulations (employee participation);

(k) information on the evaluation of the assets and liabilities to be transferred to the transferee company; and

(l) the dates of the accounts of every merging company which were used for the purpose of preparing the draft terms of merger.

(3) Particulars of the matters referred to in sub-paragraphs (b), (c) and (e) of paragraph (2) may be omitted in the case of a merger by absorption of a wholly-owned subsidiary.

(4) The draft—

(a) must not provide for any shares in the transferee company to be allotted to—

(i) a transferor company (or its nominee) in respect of shares in the transferor company held by the transferor company itself (or its nominee); or

(ii) the transferee company (or its nominee) in respect of shares in the transferor company held by the transferee company (or its nominee); and

(b) must provide that where any securities of a UK transferor company (other than shares) to which special rights are attached are held by a person other than as a member or creditor of the company, that person is to receive rights in the transferee company of equivalent value, unless—

(i) the holder has agreed otherwise; or

(ii) the holder is, or under the draft is to be, entitled to have the securities purchased by the transferee company on terms which the court considers reasonable.

Directors’ report

8.—(1) The directors of the UK merging company must draw up and adopt a report.

(2) The report must—

(a) explain the effect of the cross-border merger for members, creditors and employees of the company; and

(b) state—

(i) the legal and economic grounds for the draft terms;

(ii) any material interests of the directors (whether as directors or as members or as creditors or otherwise);

(iii) the effect on those interests of the cross-border merger, in so far as it is different from the effect on the like interests of other persons.

(3) Where the cross-border merger affects the rights of debenture holders of the company, the report must state—

(a) any material interests of the trustees of any deed for securing the issue of the debentures (whether as trustees or as members or as creditors or otherwise);

(b) the effect on those interests of the cross-border merger, in so far as it is different from the effect on the like interests of other persons.

(4) It is the duty of any trustee for the company’s debenture holders to give notice to the company’s directors of such matters relating to himself as may be necessary for the purposes of paragraph (3).

(5) The directors of the UK merging company must deliver copies of the report to its employee representatives (or if there are no such representatives, the employees) not less than 2 months before the date of the first meeting of the members, or any class of members, of the company (see regulation 13).

(6) If the employee representatives deliver an opinion on the report to the company’s registered office not less than 1 month before the date of the first meeting of the members, or any class of members, of the company, every copy of the report issued after the date on which the opinion was delivered must be accompanied by the opinion.

(7) Any person who makes default in complying with paragraph (4) commits an offence.

(8) A person guilty of an offence under this regulation is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Independent expert’s report

9.—(1) A report must be drawn up in accordance with this regulation, unless—

(a) the cross-border merger is a merger by absorption of a wholly-owned subsidiary;

(b) the cross-border merger is a merger by absorption where 90% or more (but not all) of the relevant securities of the transferor company (or, if there is more than one transferor company, of each of them) are held by or on behalf of the transferee company; or

(c) every member of every merging company agrees that such a report is not required.

(2) The report must be prepared by—

(a) an independent expert who has been appointed for the UK merging company by its directors;

(b) an independent expert who has been appointed for all the merging companies by the court in accordance with paragraph (3); or

(c) a person who has been appointed for all the merging companies for the purposes of Article 8 (independent expert’s report) of the Directive by a competent authority of another EEA State.

(3) The court may, on the joint application of all the merging companies, order the appointment of an independent expert to prepare a report for those companies in accordance with this regulation.

(4) Where it appears to an independent expert that a valuation is reasonably necessary to enable him to draw up the report, and it appears to him to be reasonable for that valuation, or part of it, to be made by another person who—

(a) appears to him to have the requisite knowledge and experience to make the valuation or that part of it, and

(b) is independent,

he may arrange for such a valuation (or accept one which has already been made), together with a report which will enable him to prepare his own report in accordance with this regulation.

(5) In the report the independent expert must—

(a) indicate—

(i) the methods used to arrive at the share exchange ratio; and

(ii) the values arrived at using each such method;

(b) describe any special valuation difficulties which have arisen;

(c) give an opinion—

(i) as to whether the methods used are reasonable in all the circumstances of the case;

(ii) if there is more than one method, on the relative importance attributed to each method in arriving at the value decided on; and

(iii) as to whether the share exchange ratio is reasonable;

(d) in the case of a valuation made by another person in accordance with paragraph (4)—

(i) state that fact and the date of the valuation;

(ii) state the person’s name and what knowledge and experience he has to carry out the valuation;

(iii) describe so much of the assets and liabilities as was valued by the other person, and the method used to value them; and

(iv) state that it appeared to himself reasonable to arrange for the valuation to be so made or to accept a valuation so made.

(6) The independent expert has the right—

(a) of access to all such documents of every merging company; and

(b) to require from the companies’ officers all such information,

as he thinks necessary for the purpose of making his report.

(7) In this regulation, “independent expert” means a person who—

(a) is eligible for appointment as a statutory auditor in accordance with section 1212 of the Companies Act 2006(10) (eligibility for appointment as statutory auditor), and

(b) is independent.

(8) For the purposes of this regulation—

(a) a person is not independent if, by virtue of section 1214 of the Companies Act 2006 (independence requirement for statutory auditor), he would not be able to act as statutory auditor of all the merging companies; and

(b) section 1214 of the Companies Act 2006 applies in relation to all the merging companies as if they were companies in respect of which a person must be appointed as auditor under Part 16 of that Act (audit of companies).

(9) In this regulation “relevant securities”, in relation to a transferor company, means shares or other securities carrying the right to vote at general meetings of the company.

Inspection of documents

10.—(1) The members of the UK merging company and its employee representatives (or if there are no such representatives, the employees) must be able, during the period specified in paragraph (2)—

(a) to inspect at the registered office of the company copies of the documents listed in paragraph (3);

(b) to obtain copies of those documents or any part of them on request free of charge.

(2) The period referred to above is the period—

(a) beginning one month before, and

(b) ending on the date of,

the first meeting of the members, or any class of members, of the company (see regulation 13).

(3) The documents referred to above are—

(a) the draft terms of merger;

(b) the directors’ report;

(c) the independent expert’s report, if such a report is required by regulation 9 (independent expert’s report).

Power of court to summon meeting of members or creditors

11.—(1) The court may, on an application under this regulation, order a meeting of—

(a) members or a class of members, for the purposes of regulation 13 (approval of members in meeting);

(b) creditors or a class of creditors, for the purposes of regulation 14 (approval of creditors in meeting);

to be summoned in such manner as the court directs.

(2) An application under this regulation may be made by—

(a) the UK merging company,

(b) any member of the UK merging company in the case of a meeting of members or a class of members,

(c) any creditor of the UK merging company in the case of a meeting of creditors or a class of creditors, or

(d) in the case of a UK merging company in administration, the administrator.

(3) Section 323 of the Companies Act 2006 (representation of corporations at meetings) applies to a meeting of the creditors summoned under this regulation as to a meeting of the company (the references in that section to a member of the company being read as references to a creditor).

Public notice of receipt of registered documents

12.—(1) The directors of the UK merging company must deliver to the registrar of companies particulars of the date, time and place of every meeting summoned under regulation 11 (power of court to summon meeting of members or creditors) together with—

(a) a copy of the order made under that regulation;

(b) a copy of the draft terms of merger; and

(c) documents giving the following particulars in relation to each merging company—

(i) its name;

(ii) its registered office;

(iii) its legal form and the law by which it is governed;

(iv) in the case of a UK company, its registered number;

(v) in the case of an EEA company to which the First Company Law Directive applies, particulars of the register in which the company file mentioned in Article 3 of that Directive (file for each registered company to be kept in national register) is kept (including details of the relevant State) and its registration number in that register;

(vi) in the case of any other EEA company, particulars, if any, of the register in which it is entered (including details of the relevant State) and its registration number in that register.

(2) The directors must deliver these documents to the registrar not less than two months before the date of the first meeting of the members, or any class of members, of the company (see regulation 13).

(3) If the documents are delivered to the registrar in accordance with paragraphs (1) and (2), he must publish—

(a) in the Gazette, or

(b) if regulations have been made under section 1116 of the Companies Act 2006 (alternative to publication in the Gazette), in accordance with those regulations,

notice of his receipt of the documents.

(4) The notice must be published by the registrar at least one month before the date of the first meeting of the members, or any class of members, of the company (see regulation 13).

(5) The notice must include—

(a) the date of receipt of the documents;

(b) the particulars referred to in paragraph (1)(c);

(c) in relation to each UK merging company, a statement that information related to the company is kept in the UK register;

(d) a statement that regulation 10 (inspection of documents) requires copies of the draft terms of merger, the directors’ report and (if there is one) the independent expert’s report to be kept available for inspection;

(e) the date, time and place of every meeting summoned under regulation 11 (power of court to summon meeting of members or creditors).

(6) The following provisions of the Companies Act 2006 apply to the documents delivered to the registrar in accordance with paragraph (1) in the same way as they apply to documents subject to the Directive disclosure requirements (as defined in section 1078(1) of that Act)—

(a) section 1068 (registrar’s requirements as to form, authentication and manner of delivery);

(b) section 1080 (the register);

(c) section 1086 (right to copy of material on the register);

(d) section 1089 (form of application for inspection or copy);

(e) section 1090 (form and manner in which copies to be provided);

(f) section 1091 (certification of copies as accurate); and

(g) section 1098 (public notice of removal of certain material from register).

Approval of members in meeting

13.—(1) Except as provided in paragraphs (3) and (4), the draft terms of merger must be approved by a majority in number, representing 75% in value, of each class of members of the UK merging company, present and voting either in person or by proxy at a meeting summoned under regulation 11 (power of court to summon meeting of members or creditors).

(2) The approval of the members may be made subject to—

(a) ratification of any arrangements adopted for employee participation in the transferee company in accordance with Part 4 of these Regulations (employee participation);

(b) an order of a competent authority of another EEA State which amends the share exchange ratio in accordance with Article 10.3 of the Directive (national procedure for amendment of share exchange ratio).

(3) The approval of the members is not required in the case of a transferor company concerned in a merger by absorption of a wholly-owned subsidiary.

(4) The approval of the members is not required in the case of an existing transferee company if—

(a) the publication of the notice required by regulation 12 (public notice of receipt of registered documents) took place in respect of the company at least one month before the date of the first meeting of members of the transferor companies;

(b) the members of the transferee company were able during a period beginning one month before, and ending on, the date of the first such meeting—

(i) to inspect at the registered office of the transferee company copies of the documents listed in regulation 10(3) (inspection of documents) in relation to all the merging companies, and

(ii) to obtain copies of those documents or any part of them on request; and

(c)(i) one or more members of the transferee company, who together held not less than 5% of the paid-up capital of the company which carried the right to vote at general meetings of the company (excluding any shares held as treasury shares), would have been able, during that period, to require a meeting of each class of members to be called for the purpose of deciding whether or not to agree to the scheme, and

(ii) no such requirement was made.

Approval of creditors in meeting

14.  If a meeting of creditors or a class of creditors is summoned under regulation 11 (power of court to summon meeting of members or creditors), the draft terms of merger must be approved by a majority in number, representing 75% in value, of the creditors or class of creditors (as the case may be), present and voting either in person or by proxy at the meeting.

Documents to be circulated or made available

15.—(1) Where a meeting is summoned under regulation 11 (power of court to summon meeting of members or creditors)—

(a) every notice summoning the meeting that is sent to a member or creditor must include copies of the documents referred to in regulation 10(3) (inspection of documents), and

(b) every notice summoning the meeting that is given by advertisement must—

(i) include copies of those documents, or

(ii) state where and how members or creditors may obtain copies of those documents.

(2) Where a notice given by advertisement states that copies of the documents referred to in regulation 10(3) (inspection of documents) can be obtained by members or creditors entitled to attend the meeting, every such member or creditor is entitled, on making application in the manner indicated by the notice, to be provided by the company with a copy of the documents free of charge.

PART 3 COURT APPROVAL OF CROSS-BORDER MERGER

Court approval of cross-border merger

16.—(1) The court may, on the joint application of all the merging companies, make an order approving the completion of the cross-border merger for the purposes of Article 11 of the Directive (scrutiny of completion of merger) if—

(a) the transferee company is a UK company;

(b) an order has been made under regulation 6 (court approval of pre-merger requirements) in relation to each UK merging company;

(c) an order has been made by a competent authority of another EEA State for the purposes of Article 10.2 of the Directive (issue of pre-merger certificate) in relation to each merging company which is an EEA company;

(d) the application is made to the court on a date not more than 6 months after the making of any order referred to in sub-paragraph (b) or (c);

(e) the draft terms of merger approved by every order referred to in sub-paragraphs (b) and (c) are the same; and

(f) where appropriate, any arrangements for employee participation in the transferee company have been determined in accordance with Part 4 of these Regulations (employee participation).

(2) Where the court makes such an order—

(a) it must in the order fix a date on which the consequences of the cross-border merger (see regulation 17) are to have effect; and

(b) that date must be not less than 21 days after the date on which the order is made.

(3) After the consequences of the cross-border merger have taken effect (see regulation 17), an order made under this regulation is conclusive evidence that—

(a) the conditions set out in paragraph (1) have been satisfied; and

(b) the requirements of regulations 7 to 10 and 12 to 15 (pre-merger requirements) have been complied with.

Consequences of a cross-border merger

17.—(1) The consequences of a cross-border merger are that—

(a) the assets and liabilities of the transferor companies are transferred to the transferee company;

(b) the rights and obligations arising from the contracts of employment of the transferor companies are transferred to the transferee company;

(c) the transferor companies are dissolved; and

(d) in the case of a merger by absorption or a merger by formation of a new company, the members of the transferor companies except the transferee company (if it is a member of a transferor company) become members of the transferee company.

(2) The consequences take effect—

(a) where an order has been made under regulation 16 (court approval of merger), on the date fixed in that order; or

(b) where an order has been made by a competent authority of another EEA State for the purposes of Article 11 of the Directive (scrutiny of completion of merger), on the date fixed in accordance with the law of that State.

(3) The transferee company must take such steps as are required by law (including by the law of another EEA State) for the transfer of the assets and liabilities of the transferor companies to be effective in relation to other persons.

Copy of order to be provided to members

18.—(1) Where an order is made under regulation 16 (court approval of merger) approving the completion of a cross-border merger, the UK transferee company must, on request by any member, send to him a copy of the order.

(2) If a company makes default in complying with this regulation, an offence is committed by every officer of the company who is in default.

(3) A person guilty of an offence under this regulation is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Copy of order to be delivered to the registrar of companies

19.—(1) Where an order is made under regulation 16 (court approval of merger)—

(a) the UK transferee company, and

(b) every UK transferor company,

must deliver the documents and particulars specified in paragraph (2) to the registrar of companies for registration not more than 7 days after the date on which it was made.

(2) The documents and particulars referred to in paragraph (1) are—

(a) a copy of the order made under regulation 16 (court approval of merger);

(b) in the case of a transferor company which is an EEA company to which the First Company Law Directive applies, particulars of the register in which the company file mentioned in Article 3 of that Directive (file for each registered company to be kept in national register) is kept (including details of the relevant State) and its registration number in that register;

(c) in the case of any other transferor company which is a EEA company, particulars, if any, of the register in which it is entered (including details of the relevant State) and its registration number in that register.

(3) Where an order is made by a competent authority of another EEA State approving the completion of a cross-border merger for the purposes of Article 11 of the Directive (scrutiny of completion of merger), every transferor company which is a UK company must deliver a copy of the order to the registrar of companies for registration not more than 14 days after the date on which it was made.

(4) The following provisions of the Companies Act 2006(11) apply to an order delivered to the registrar in accordance with paragraph (1) or (2) in the same way as they apply to documents subject to the Directive disclosure requirements (as defined in section 1078(1) of that Act)—

(a) section 1068 (registrar’s requirements as to form, authentication and manner of delivery);

(b) section 1077 (public notice of receipt of certain documents);

(c) section 1079 (effect of failure to give public notice);

(d) section 1080 (the register);

(e) section 1086 (right to copy of material on the register);

(f) section 1089 (form of application for inspection or copy);

(g) section 1090 (form and manner in which copies to be provided);

(h) section 1091 (certification of copies as accurate); and

(i) section 1098 (public notice of removal of certain material from register).

(5) If a UK merging company makes default in complying with paragraph (1) or (2), an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(6) A person guilty of an offence under this regulation is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Obligations of transferee company with respect to articles etc

20.—(1) If an order made under regulation 16 (court approval of merger) amends—

(a) the articles of association of the UK transferee company, or

(b) any resolution or agreement in relation to the UK transferee company to which Chapter 3 of Part 3 of the Companies Act 2006 (resolutions and agreements affecting a company’s constitution) applies,

the copy of the order delivered to the registrar of companies by the UK transferee company under regulation 19 (copy of order to be delivered to the registrar of companies) must be accompanied by a copy of the company’s articles, or the resolution or agreement in question, as amended.

(2) Every copy of the company’s articles issued by the company after the order is made must be accompanied by a copy of the order, unless the effect of the order has been incorporated into the articles by amendment.

(3) In this regulation—

(a) references to the effect of the order include the effect of the cross-border merger to which the order relates; and

(b) in the case of a company not having articles, references to its articles shall be read as references to the instrument constituting the company or defining its constitution.

(4) If a UK transferee company makes default in complying with this regulation, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this regulation is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Notification of registration

21.—(1) Where the registrar of companies receives a copy of an order made under regulation 16 (court approval of merger) approving the completion of a cross-border merger, he must—

(a) without undue delay, in relation to each transferor company which is an EEA company to which the First Company Law Directive applies, give notice of that order to the register in which the company file mentioned in Article 3 of the First Company Law Directive (file for each registered company to be kept in national register) is kept;

(b) without undue delay, in relation to any other transferor company which is a EEA company, give notice of the order to the register, if any, in which it is entered; and

(c) on or without undue delay after the date fixed in the order for the purposes of regulation 16(2) (court approval of merger), take the steps specified in paragraph (3) in relation to every UK transferor company.

(2) Where the registrar of companies receives from the registry of another EEA State notice for the purposes of Article 13 of the Directive (notification of registries in other Member States) of an order approving the completion of a cross-border merger, he must on or without undue delay after the date fixed for the purposes of Article 12 of the Directive (entry into effect of the cross-border merger) take the steps specified in paragraph (3) in relation to every UK transferor company.

(3) The steps referred to in paragraphs (1)(c) and (2) are—

(a) striking the name of the UK transferor company from the UK register, and

(b) placing a note in the register stating that as from the date on which the consequences of the cross-border merger had effect (see regulation 16(2) and Article 12 of the Directive), the assets and liabilities of the UK transferor company were transferred to the transferee company.

PART 4 EMPLOYEE PARTICIPATION

CHAPTER 1 APPLICATION OF THIS PART

Application of this Part

22.—(1) Subject to paragraph (2), this Part shall apply where the transferee company is a UK company and where—

(a) a merging company has, in the six months before the publication of the draft terms of merger, an average number of employees that exceeds 500 and has a system of employee participation, or

(b) a UK merging company has a proportion of employee representatives amongst the directors, or

(c) a merging company has employee representatives amongst members of the administrative or supervisory organ or their committees or of the management group which covers the profit units of the company.

(2) Chapters 4 and 6 to 9 shall apply to a UK merging company, its employees or their representatives, regardless of whether the transferee company is a UK company.

(3) This Part applies to Northern Ireland with the modifications contained in Schedule 2.

CHAPTER 2 MERGING COMPANIES AND THE SPECIAL NEGOTIATING BODY

Duty on merging company to provide information

23.—(1) As soon as possible after adopting the draft terms of merger (see regulation 7), each merging company shall provide information to the employee representatives of that company or, if no such representatives exist, the employees themselves.

(2) The information referred to in paragraph (1) must include, as a minimum, information—

(a) identifying the merging companies,

(b) of any decision taken pursuant to regulation 36 (merging companies may select standard rules of employee participation), and

(c) giving the number of employees employed by each merging company.

(3) When a special negotiating body has been formed in accordance with regulation 25, each merging company must provide that body with such information as is necessary to keep it informed of the plan and progress of establishing the UK transferee company until the date upon which the consequences of the cross-border merger take effect (see regulation 17).

Complaint of failure to provide information

24.—(1) An employee representative or, where no such representative exists, any employee may present a complaint to the CAC that—

(a) a merging company has failed to provide information as required by regulation 23; or

(b) the information is false or incomplete in a material particular.

(2) Where the CAC finds the complaint well-founded it shall make an order requiring the company to disclose information to the complainant specifying—

(a) the information in respect of which the CAC finds that the complaint is well-founded and which is to be disclosed to the complainant; and

(b) a date (not being less than one week from the date of the order) by which the company must disclose the information specified in the order.

The special negotiating body

25.—(1) Subject to regulation 36 (merging companies may select standard rules of employee participation), each merging company shall make arrangements for the establishment of a special negotiating body.

(2) The task of the special negotiating body shall be to reach an employee participation agreement with the merging companies (see Chapter 3).

(3) The special negotiating body shall be constituted in accordance with regulation 26.

Composition of the special negotiating body

26.—(1) Employees of merging companies registered in each EEA State (including the UK) shall be given an entitlement to elect one member of the special negotiating body, in accordance with these Regulations, for each 10% or fraction thereof which employees of merging companies registered in that State represent of the total workforce of the merging companies. These members shall be the “constituent members”.

(2) If, following an election under paragraph (1), the members elected to the special negotiating body do not include at least one constituent member in respect of each merging company, the employees of any merging company in respect of which there is no constituent member shall be given an entitlement, subject to paragraph (3), to elect an additional member to the special negotiating body.

(3) The number of additional members which the employees of the merging companies are entitled to elect under paragraph (2) shall not exceed 20% of the number of constituent members elected under paragraph (1) and if the number of additional members under paragraph (2) would exceed that percentage the employees who are entitled to elect the additional members shall be—

(a) if one additional member is to be elected, those employed by the merging company not represented under paragraph (1) having the highest number of employees; and

(b) if more than one additional member is to be elected, those employed by the merging companies registered in each EEA State that are not represented under paragraph (1) having the highest number of employees in descending order, starting with the company with the highest number, followed by those employed by the companies registered in each EEA State that are not so represented having the second highest number of employees in descending order, starting with the company (among those companies) with the highest number.

(4) Each merging company shall, as soon as reasonably practicable and in any event no later than one month after the establishment of the special negotiating body, inform their employees of the outcome of any elections held under this regulation.

(5) If, following the election of members to the special negotiating body under this regulation—

(a) changes to the merging companies result in the number of members which employees would be entitled to elect under this regulation either increasing or decreasing, the original election of members of the special negotiating body shall cease to have effect and the employees of the merging companies shall be entitled to elect the new number of members in accordance with the provisions of these Regulations; and

(b) a member of the special negotiating body is no longer willing or able to continue serving as such a member, the employees whom he represents shall be entitled to elect a new member in his place.

Complaint about establishment of special negotiating body

27.—(1) An application may be presented to the CAC for a declaration that the special negotiating body has not been established at all or has not been established properly in accordance with regulation 25 or 26.

(2) Where it is alleged that the failure is attributable to the conduct of the merging company, an application may be presented under this regulation by—

(a) a person elected under regulation 26 to be a member of the special negotiating body; or

(b) an employee representative or, where no such representative exists in respect of the company, an employee of the company.

(3) Where it is alleged that the failure is attributable to the conduct of the employees or the employee representatives, an application may be presented under this regulation by the merging company.

(4) The CAC shall only consider an application made under this regulation if it is made within a period of one month from the date or, if more than one, the last date on which the merging companies complied or should have complied with the obligation to inform their employees under regulation 26(4).

(5) Where the CAC finds an application made under paragraph (2) well-founded it shall make a declaration that the special negotiating body has not been established at all or has not been established properly and the merging companies continue to be under the obligation in regulation 25.

(6) Where the CAC finds an application made under paragraph (3) well-founded it shall make a declaration that the special negotiating body has not been established at all or has not been established properly and the merging companies no longer continue to be under the obligation in regulation 25.

CHAPTER 3 NEGOTIATION OF THE EMPLOYEE PARTICIPATION AGREEMENT

Negotiations to reach an employee participation agreement

28.—(1) In Chapters 3 and 5 the merging companies and the special negotiating body are referred to as “the parties”.

(2) Subject to regulations 31 (decision not to open or to terminate negotiations) and 36 (merging companies may select standard rules of employee participation), the parties are under a duty to negotiate in a spirit of cooperation with a view to reaching an employee participation agreement.

(3) The duty referred to in paragraph (2) commences one month after the date or, if more than one, the last date on which the members of the special negotiating body were elected or appointed and applies—

(a) for the period of six months starting with the day on which the duty commenced or, where an employee participation agreement is successfully negotiated within that period, until the completion of the negotiations;

(b) where the parties agree before the end of that six month period that it is to be extended, for the period of twelve months starting with the day on which the duty commenced or, where an employee participation agreement is successfully negotiated within the twelve month period, until the completio