Malta · Amalgamations, divisions and conversions

Amalgamate by merger, by acquisition or by forming a new company

the Companies Act, Chapter 386 · articles 330, 331, 338 and 343, articles 344 and 345, articles 346, 348 and 349, articles 350, 351, 352 and 354, and articles 357 and 358

This page is for an amalgamation between companies. A division of a company into two or more companies is a separate regime under articles 360 onwards and has its own page, so do not run the merger files on a division.

The second trap is the three-month wait. The amalgamation does not take effect until three months from the last publication of the statement relating to the approving resolutions, and holders of securities other than shares have rights under article 352 in that window. Companies that treat the date of the resolution as the effective date get the accounting date wrong.

Where the commercial partnership to be converted is an en nom collectif or en commandite partnership, article 330(2) applies, and where it is a company, article 330(3). The decision or resolution approving the conversion must be delivered as article 331(1) requires, delivery being made by any of the partners or directors under article 331(2). The decisions taken by each of the amalgamating commercial partnerships must be delivered under article 338(1), delivery being made as article 338(2) provides. A company may only be amalgamated with one or more companies as article 343(7) provides.

The directors of the acquiring company and of each company being acquired must draw up draft terms of merger under article 344(1), specifying the status and the other matters listed in article 344(2), and the draft terms duly completed must be signed as article 344(3) requires. A merger by acquisition may only be made if it has been approved as article 345(1) requires, approval not being valid unless article 345(2) is satisfied. Where there is more than one class of shares, article 345(4) applies, and the extraordinary resolution of each amalgamating company is dealt with under article 345(5).

The directors of each amalgamating company must draw up the report required by article 346(1). One or more experts acting on behalf of each amalgamating company must examine the draft terms under article 348(1), the report specifying whether the share exchange ratio is fair and reasonable under article 348(2) and describing any special valuation difficulties under article 348(3). The accounting statement provided for in article 349(1)(c) must be drawn up as article 349(2) requires, and every shareholder is entitled to obtain, on request and free of charge, the documents described in article 349(3).

The extraordinary resolutions taken by each amalgamating company are dealt with under article 350. The amalgamation does not take effect until three months from the date of the last publication of the statement relating to those resolutions (article 351(1)). Holders of securities other than shares are protected by article 352. An amalgamation has the consequences set out in article 354(1), no shares in the acquiring company being exchanged in the case in article 354(2), and where the assets of a company being acquired include immovable property, article 354(3) applies.

Articles 344 to 356, other than article 345(6), apply to a merger by formation of a new company as article 357(1) provides. The draft terms of merger of each merging company and the memorandum of the new company are dealt with under article 357(2), and the new company is formed as article 357(3) requires. The operation whereby the assets and liabilities of one or more companies are transferred as described in article 358(1) is governed by that article, with the definitions in article 358(2), and the approval of the general meeting of each company involved is required as article 358(3) provides.

Files 63 to 67 of the MT-COMPANY pack run the amalgamation in the order the Act sets. File 63 covers a conversion of a commercial partnership and the general requirements before any amalgamation. File 64 builds the draft terms of merger against article 344(2) item by item and checks the approval majority under article 345. File 65 collects the directors' report, the experts' report on the share exchange ratio and the accounting statement, and asks whether every shareholder was able to obtain the documents free of charge under article 349(3). File 66 asks for the date of the last publication of the statement and counts the three months in article 351(1) to give you the effective date, then applies the consequences in article 354. File 67 covers a merger by formation of a new company and the acquisition of a company ninety per cent held.

This situation is covered by these files from the pack MT-COMPANY

• File 63 · Conversion of a commercial partnership and the general requirements for an amalgamation
• File 64 · Merger by acquisition: the draft terms of merger and their approval
• File 65 · Merger by acquisition: the directors' report, the experts' report and shareholder information
• File 66 · Merger by acquisition: publication, the date of effect and the consequences
• File 67 · Merger by formation of a new company, and acquisition of a company ninety per cent held

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