The main body of legislation regulating Mergers and Acquisitions (M&A) of companies in Malta is the Companies Act - Chapter 386 of the Laws of Malta (here referred to as the "Act"). The legislative framework is composed of laws and regulations that seek to regulate various aspects that may feature in M&A transactions, including local and cross-border activities.

The Act regulates the amalgamation of private and public limited companies in the form of a merger by forming a new company and acquiring a company by another company.

Notably, only, a company may be amalgamated with other companies. However, it is impossible to amalgamate a company with any different commercial partnership.

MERGER BY ACQUISITION

A Merger by Acquisition is the legal process required for one company to acquire another company, with the latter ceasing to exist. Here, the acquiring company acquires all the assets, liabilities, and obligations of the company (or companies) being acquired. The acquired company's shareholders become shareholders of the acquiring company, and the company being acquired stops existing.

The acquired company can be dissolved without being wound up according to the provisions of the Act. The dissolution will be deemed to occur as soon as the amalgamation becomes effective.

The amalgamation of companies becomes effective once the Registrar of Companies at the Malta Business Registry (Registrar) has struck the company's name being acquired off the register and issues a new certificate of registration reflecting the recent Merger for the acquiring company.

REQUIREMENTS

Before a company can be struck off the register, requirements must be satisfied, as follows:

Both the directors of the acquiring company and the company (companies) being acquired must draw up the Draft Terms of Merger in writing. This document, amongst other things, must specify the name and registered office of the amalgamating companies and the status and distribution of shares in the acquiring company. The document must be signed by at least one director and the company secretary of each amalgamating company.

An extraordinary resolution of each amalgamating company must approve the Merger by Acquisition. The resolution must be reached at least one month after and not later than three months from the publication of the Draft Terms of Merger.

All the companies involved in the Merger are to inform their respective general meetings by means of a detailed report explaining the legal and economic grounds of the Draft Terms of the Merger and any material change in the assets and liabilities. This information must be shared between the date of preparation of the draft terms of the Merger and the date of the general meetings which will decide on the Draft Terms of Merger.

Experts, approved by the Registrar and acting on behalf of each of the companies involved in the merger, will draw a written report, which goes to the shareholders. The report will specify whether the share exchange ratio is fair and reasonable. It will indicate the methods used to determine the exchange ratio, and whether these methods are adequate and, also, report on any valuation difficulties that might have arisen.

Experts, approved by the Registrar and acting on behalf of each of the companies involved in the Merger, will draw a written report to the shareholders. The report will specify whether the share exchange ratio is fair and reasonable. In addition, it will indicate the methods used to determine the exchange ratio, whether these methods are adequate, and report any valuation difficulties that might have arisen.

The shareholders of the amalgamating companies have a right to inspect documents at the registered office of each company at least one month before the date fixed for the general meeting, which decides on the Draft Terms of Merger. The documents are:

• the Draft Terms of Merger
• the annual accounts
• the directors' reports of the amalgamating companies for the preceding three accounting periods
• the directors' report relating to the amalgamation
• the experts' reports relating to the amalgamation
• where required, an accounting statement is drawn up as at a date which shall not be earlier than the first day of the third month preceding the date of the draft terms of the Merger, if the latest annual accounts relate to an accounting period which ended more than six months before that date
• for paragraph (f), an accounting statement shall not be required if the company publishes a half-yearly financial report following listing rules issued in terms of the Financial Markets Act and makes it available to shareholders by this sub-article.
• Furthermore, an accounting statement shall not be required if all the shareholders and all holders of other securities conferring the right to vote of each of the companies involved in the Merger have so agreed.
• Notwithstanding the above, interim depreciation and provisions and material changes in actual values, not shown in the accounting records, are taken into account.

On request and free of charge, the shareholders are entitled to obtain full or partial copies (which may be provided in electronic form) of the documents mentioned above. For example, suppose a company makes the records available on its website for a continuous period beginning at least one month before the day fixed for the general meeting, which is to decide on the Draft Terms of Merger and ending not earlier than the conclusion of that meeting. In that case, it will not need to make the documents referred to above available at its registered office.

CREDITORS' RIGHTS

The Merger of two or more companies comes into effect three months from the date of the last publication of the statement published in the Gazette or on the website maintained by the Registrar. During the three months before the merged company becomes effective, creditors of any of the merging companies, whose debt existed before the publication of the Draft Terms of Merger may, by sworn application, object to the Merger giving their reasons for their objection.