Malta · Amalgamations, divisions and conversions

Divide a company by acquisition or by forming new companies

the Companies Act, Chapter 386 · articles 360, 361 and 362, and articles 363, 365, 367, 368, 369, 371, 374 and 374A

This page is for a division. An amalgamation of two or more companies runs under articles 343 onwards and has its own page. A division may only be effected into two or more companies as article 360(8) requires, so an intended transfer to a single recipient is not a division at all.

The second trap is the continuing duty to inform. The directors of the company to be divided must inform the general meeting of the matters in article 363(3) and (4), which includes material changes between the draft terms and the meeting. Silence about a change discovered after the draft terms were drawn up is itself the breach.

The fact that the company to be divided has been dissolved voluntarily is dealt with under article 360(6). A division of a company may only be effected into two or more companies as article 360(8) provides. The directors of the company to be divided and of each recipient company must draw up draft terms of division under article 361(1), specifying the status and the other matters listed in article 361(2), and the draft terms for each company involved are dealt with under article 361(5).

A division may only be made if it has been approved by an extraordinary resolution as article 362(1) requires. The provisions of the Act governing alterations and additions to the memorandum apply under article 362(3). Where there is more than one class of shares in any of the companies involved, article 362(4) applies, and the extraordinary resolution taken by each company involved is dealt with under article 362(5).

The directors of each company involved in a division must draw up the report required by article 363(1), which where applicable refers to any report prepared under article 363(2). The directors of a company to be divided must inform the general meeting of the matters in article 363(3), and further of the matters in article 363(4). All shareholders of the companies involved are entitled to the documents listed in article 365(1), the accounting statement provided for in article 365(1)(c) being drawn up as article 365(2) requires, and every shareholder being entitled to obtain them on request and free of charge under article 365(3).

The extraordinary resolution approving the division is dealt with under article 367. The division does not take effect until three months from the date of the publication of the statement relating to those resolutions (article 368(1)). Holders of securities other than shares to which special rights attach are protected by article 369. Where the assets of the company to be divided include immovable property, article 371(4) applies.

In a division by formation of new companies, the draft terms must contain the additional information required by article 374(2), and the draft terms of the company to be divided are dealt with under article 374(3). In the further case governed by article 374A, the draft terms must contain the additional information required by article 374A(2), and are dealt with under article 374A(3).

Files 68 and 69 of the MT-COMPANY pack run the division and nothing else. File 68 asks how many recipient companies there are and applies article 360(8), then builds the draft terms of division against article 361(2) item by item and checks the approval under article 362. File 69 collects the directors' report, records what the general meeting was told under article 363(3) and (4), confirms that every shareholder could obtain the documents free of charge under article 365(3), asks for the date of publication of the statement and counts the three months in article 368(1), and then takes the two variants in articles 374 and 374A.

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

• File 68 · Division by acquisition: the draft terms of division and their approval
• File 69 · Division: the directors' report, shareholder information, the date of effect and division by formation of new companies

ComplianceSME tracks the Companies Act and issues update files through the membership, so that you are never working from a superseded version. Membership

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