No Borders, Just Business: Getting Down to Cross-Border Mergers
No Borders, Just Business: Getting Down to Cross-Border Mergers
Cross-border mergers have become increasingly popular in the European Union (EU) due to the need for companies to access new opportunities, new markets, and optimise business structures. This article aims to provide an overview of cross-border mergers whereby an Irish Company is merging into a foreign Company, focusing on the applicable laws, procedural requirements, and key considerations for Irish companies involved in these transactions.
Whitney Moore has recently advised on a merger by acquisition whereby a Belgian public limited liability company, CetproBel S.A., acquired the assets and liabilities of an Irish company, Cetpro Limited, including acting in the application to the Commercial Court for a pre-merger certificate (further details of which procedure are dealt with below). Following the issue of the pre-merger certificate and certain necessary steps in Belgium, Cetpro Limited was successfully dissolved in December 2025.
Legal Framework
Cross-border mergers in Ireland are governed by European Union (Cross-Border Conversions, Mergers And Divisions) Regulations 2023 (SI No 233 of 2023 (the “Mobility Regulations”), which transpose EU Directive 2019/2121 into Irish Law. The Mobility Regulations which repeal/replace the 2008 Regulations (SI 157/2008), provide a harmonised framework within the EU for the merging of companies from different EU Member States.
Conversions
The Mobility Regulations provide a framework for Cross-Border Conversions, enabling a limited company in one EU Member State to convert into a limited company in another EU Member State without being dissolved, wound-up or liquidated. This provides the opportunity for Irish companies with limited liability to migrate and change their registered office to other countries within the EU without changing its legal personality and vice versa. Conversions involve a single entity, whereas mergers involve two or more entities. The process of Conversion follows the process for the below Merger procedure, save for a few differences. It is important to note that a conversion is not reversible. The main effects of a conversion include:
- Assets and liabilities of the original company become those of the converted company;
- All members of the original company become members of the converted company (members who vote against the conversion can make a request for cash compensation);
- The converted company is substituted as a party in all proceedings in the original company’s name;
- All contracts in the original company’s name are to be read as being in the name of the converted company and the converted company becomes a party to the contracts; and
- All money due and owing to the original company will become due and owing to the converted company.
A notable example of a successful Cross-Border Conversion which took place in January 2024 is the Zurich Conversion. This involved the cross-border conversion of Irish non-life insurer Zurich Insurance plc into a German Stock Corporation, which is now known as Zurich Insurance Europe AG. This transaction was the first Cross-Border Conversion application to come before the Irish Courts and marked the first Cross-Border Conversion of an Irish company.
Types of Cross-Border Mergers
An EU cross-border merger is the merger of two or more limited companies which are incorporated in different Member States of the EU. The Mobility Regulations recognise and provide for three types of cross-border mergers:
- Merger by Acquisition are either:
- where one or more companies are acquired by another existing company, with the acquiring company assuming all assets and liabilities of the acquired companies, and the acquired company is dissolved without going into liquidation in exchange for the issuing to the members of that company of shares, representing the capital of the transferor company; or
- where a company acquires all the assets and liabilities of another company that is dissolved without going into liquidation without the issuing of any new shares by the acquiring company, where one person holds all shares in the merging companies, either directly or indirectly, or the members of the merging companies hold their shares in the same proportion in all merging companies.
- Merger by Absorption where a company without going into liquidation, is dissolved and all its assets and liabilities are transferred to a company that is the holder of the shares in the company; and
- Merger by Formation of a New Company where two or more companies, on being dissolved without going into liquidation, merge to form a new entity, with the original companies ceasing to exist post-merger, i.e., transferring all assets and liabilities to a newly and jointly formed company in exchange for the issuance of shares to their members.
Cross Border Merger Procedure
Cross-border mergers involve a multi-step process that requires careful compliance with both Irish and EU law. The procedure for a cross-border merger is summarised below:
- Common Draft Terms must be drawn up and adopted by the board of directors of each merging company;
- Directors’ explanatory report is required unless all members waive their entitlement and merging companies have no employees other than the directors;
- Expert’s Report which can be waived if all members of the merging companies agree;
- Registration of the common draft terms, notice to employees, members and creditors, and Directors/Experts Reports in the CRO at least 30 days before the general meeting;
- Publication by the Irish company of merger advertisement in one national newspaper and in the CRO Gazette by the CRO 30 days prior to the holding of the general meeting;
- General meeting for approval of Common Draft Terms;
- Initial application to the High Court for entry into the Commercial Court List;
- Application to the High Court for a pre-merger certificate;
- Registration in the Companies Registration Office of order by the High Court.
Drafting the Common Draft Terms of Merger
The merging companies must prepare and agree upon the common draft terms of the merger, which outline the specifics of the merger, to include the details of the merging companies, the terms of the share exchange, the effective date, the impact on any employees of the company and information on the valuation of the assets and liabilities of the absorbed/acquired company transferred to the absorbing/acquiring company.
Directors’ Report
Directors of the Irish merging company must prepare a report for the company’s members explaining and justifying the legal and economic aspects of the cross-border merger, and the implications for the employees, creditors, and the future business of the company. This report can be waived on consent of all Members of the company if the company have no employees. The Report should be made available to members and employees of the company six weeks prior to the General Meeting being held to approve the operation.
Independent Expert’s Report
An independent expert’s report, typically drawn up by an auditor or qualified accountant, is a report on the proposed cash compensation to members and the proposed share exchange ratio. The expert report is required to protect the interests of the shareholders and creditors but can be waived if all members of the Irish merging company agree; this will need to be accounted for in board minutes of the general meeting of members of the company.
Employee Consultation
The Irish transferor company is required to inform and consult with employee representatives about the merger. The Irish transferor company must provide detailed information about the impact of the merger on employees and should ensure to engage in discussions with employees and/or their representatives to address any concerns they might have, and this should be done well in advance of the proposed merger.
Notification to the Registrar of Companies & Advertisement of Cross Border Merger
Once shareholder approval is obtained, the merging Irish company must notify the Companies Registration Office (CRO) in Ireland by filing the requisite form CBM1 together with the Common Draft Terms; Notice to Employees, Creditors and Members; proof of shareholder approval; and the Independent Expert’s report. The CRO reviews the merger documents to ensure compliance and these documents must be made available to members of the public free of charge on the CRO, for a period of 30 days prior to the court date for the pre-merger certificate application. The cross-border merger must be advertised for the benefit of the Creditors of the company, in one national newspaper and in the CRO Gazette at least 30 days before the date of the General Meeting, it is advisable that the advertisement should account for the court dates on which the application shall be heard, and should notify the creditors of their right to object, and to file any Affidavits in respect of said rejection, in advance of that court date.
Shareholder Approval
The common draft terms and the proposed cross border merger must be approved by special resolution passed at a general meeting of the Irish merging company. Member’s approval of the terms of merger may be subject to merger control approval having been obtained from the Competition and Consumer Protection Commission and any other relevant authorities.
Creditors’ Approval
Creditors enjoy enhanced protections under the Mobility Regulations. The Irish company should seek creditor approval of the merger and draft terms. Issues may arise where creditors object to the merger. Creditors of the transferor company can apply to the High Court if they are not satisfied that the draft terms offer sufficient safeguards offered to them and can demonstrate that the satisfaction of the creditor’s claim against the company is at stake. This application must be made within three months of the date the draft terms were delivered to the CRO. This three-month period can be waived if written consent or letters of no-objection to the merger are obtained from the creditors which can be exhibited to the High Court application to satisfy this requirement; therefore, it is advisable that creditor approval should be sought well in advance of the proposed High Court application.
Court Application for Pre-Merger Certificate
The legality of a cross-border merger must be checked in each EU Member State involved before it can enter into force. An application for a pre-merger certificate must be brought by the Irish merging company before the Irish High Court by way of notice of motion and supporting affidavits setting out the compliance with the relevant proofs. It is paramount to have all required proofs dealt with and to hand when coming before the court for the pre-merger certificate application. The court will ensure all proofs are in order, in particular with respect to consent of members, employees and creditors of the transferor company. Where creditor objections arise or where the merger involves a significant change to the company’s structure, delays might arise and the approval of the court might be needed.
Issue of a Pre-Merger Certificate
If the court is satisfied that all issues have been dealt with and all conditions have been met, the court will issue a pre-merger certificate. A certified copy of the pre-merger certificate is then forwarded to the Irish Registrar of the Companies for registration, confirming that the Irish merging company has complied with all requirements set out under the Mobility Regulations.
Completion of the Merger
The certificate together with the perfected Order should be forwarded on to the transferee company in the other Member State and the legal advisors for the transferee company shall be free to take the relevant steps for the merger within their Member State. A court or notary of the public from the Member State of the acquiring/absorbing company shall then record the completion of the merger in a deed after having ascertained that the merging companies have approved the terms of the Merger in the same terms. Upon completion, the merger is legally effective, and the assets and liabilities are transferred to the merged company and the transferor company is dissolved without going into liquidation.
The main effects of a cross-border merger include:
- The transferor company is dissolved.
- The assets of the transferor transfer to the merged company.
- The contracts, agreements, or instruments to which the transferor company is a party shall be construed as if the absorbing/acquiring company had been a party thereto instead of the transferor company.
- The members of the transferor become members of the merged company.
- All monies due and owing to the transferor transfer over to the merged company.
- The merged company is named as a party in all proceedings that are in the transferor’s name.
Key Considerations
Tax Implications
Ireland’s attractive tax regime is a significant factor driving cross-border mergers. However, the tax implications of such mergers must be carefully considered, particularly regarding capital gains tax, and stamp duty. Merging companies should seek advice from appropriate tax experts.
Employee Rights
Employee rights are protected under both Irish and EU law, with the Regulations ensuring that employee representatives are informed and consulted during the merger process. Employees may also have rights under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), which safeguard their employment terms post-merger. Merging companies must consider the effect of the merger on their employees and notify said employees of the proposed merger.
Constitution
Merging companies should ensure compliance with their own Constitution in the carrying out of the cross-border merger procedure.
Creditor Consents
Companies should be advised to seek consent to the merger from its creditors well in advance of the proposed court application to ensure any issues arising can be dealt with in advance.
Competition Law
Cross-border mergers may trigger the need for competition clearance under both EU and Irish competition law. Member’s approval of the terms of merger may be subject to merger control approval having been obtained from the Competition and Consumer Protection Commission and any other relevant authorities. The merger must not create a monopoly or significantly reduce competition in any relevant market.
Conclusion
Cross-Border Mergers have become increasingly popular in Ireland, with many applications being made to the Irish High Court this year. There are inconsistencies between national regulations implementing EU Directive 2019/2121 across the EU Member States; as such, it is of key importance for legal counsel across the two Member States, to ensure coordination and planning of the merger process thoroughly to ensure a seamless transition of companies. Cross-border mergers offer significant opportunities for companies seeking to expand their operations across the EU; however, companies must ensure compliance with Irish and EU law. By understanding the procedural requirements and addressing key considerations such as tax implications, shareholder protection, employee rights, companies can successfully execute cross-border mergers across Member States, unlocking new growth potential and enhancing their competitive advantage.
If you would like further information, please contact your usual adviser in Whitney Moore.
Authored by Alaina Maher, Associate, Brendan Ringrose, Corporate Partner and Colin Hayes, Dispute Resolution Partner, Whitney Moore LLP.