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Mergers, divisions, arrangements and reconstructions - Coggle Diagram
Mergers, divisions, arrangements and reconstructions
Where a compromise or arrangement is proposed between a public company and its creditors or members in connection with a scheme for the reconstruction of a company this is known as a merger or division depending on the nature of the reconstruction (CA2006 s.902)
The common feature of these reconstructions is that the consideration for the transfer is satisfied by shares in the transferee receivable by the members of the transferor with or without an accompanying cash payment
A merger 'by absorption' means a situation where the undertaking, property and liabilities of one or more public companies are to be transferred to another existing public company
A merger 'by formation' is where there are two or more transferor public companies and the transferee company is a newly incorporated company whether public or private
A division is a scheme where the undertaking, property and liabilities of the company are to be divided among and transferred to two or more companies each of which is. either an existing public company or a newly incorporated company, where public or private
Mergers
The legislation regulating mergers between public companies is extremely complex and designed to ensure that the members of all companies involved in the scheme are either provided with copies of or given access to a number of documents and reports to ensure that they have full disclosure of relevant facts.
A minimum set of disclosure documents must be made available either by making them available at the company's registered office or making them available on a website for a period of at least one month prior to any member or class meetings to approve the transactions and notice must be given to the Registrar of the availability of the draft merger agreement for publishing in the Gazette
The members of each class of shares of the merging companies must approve the terms of the scheme by special resolution requiring approval of 75% of the members present, in person or by proxy, at the general or class meeting convened to consider the resolutions
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Divisions
The documents listed in CA2006 ss. 920-925 must be made available either by making them available at the company's registered office or making them available on a website for a period of at least one month prior to any member or class meetings to approve the transaction and notice must be given to the Registrar of the availability of the draft division notice for publishing in the Gazette
The members of each class of shares of the companies involved in the division must approve the terms of the scheme by special resolution requiring at least 75% of the members present in person or by proxy at the general or class meeting convened to consider the resolutions
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