Company law

The issue before the court was whether a proposed cross-border merger would be compliant with, and effective under the Companies (Cross-Border Mergers) Regulations 2007 (SI 2007/2974) (the Regulations) and Council Directive (EC) 2005/56 in circumstances where the shareholders in the transferor company had agreed not to receive shares or other securities in the transferee. Consideration was given to regs 2(2) and 4 of the Regulations and Art 2(2)(a) of the Directive.

The court ruled that it would not be right to read the definitions of cross-border merger in the Directive as requiring an issue of shares in the strict sense of that word in English company law. All that was required was that the rights of members of the transferor company, in the case of a merger by absorption, to be offered shares in exchange should be recognised, even if those rights were simultaneously declined by all the members. The same flexibility might be read into the relevant provisions of the Regulations. Regulations 2(2) and