LOCAL MERGERS IN CYPRUS
This report outlines the applicable laws required procedures in Cyprus regulating domestic mergers, for companies registered in Cyprus only.
Cyprus Companies Law, Cap 113 (the "Companies Law"), provides the procedure where two companies can amalgamate into one entity by the dissolution of one of the companies without the absorbed company going into liquidation. The surviving corporation acquires all the assets and liabilities of the corporation getting absorbed.
A merger between Cyprus companies is defined by section 30 of the Income Tax Law (the "Tax Law") as an act where:
- one or more companies, on their dissolution without going into liquidation, transfer all of their assets and liabilities to another existing company in exchange for the issue to their shareholders of shares in the capital of the receiving company and potentially in exchange for cash, not exceeding 10% of the nominal value of the shares or, in the absence of a nominal value, of the accounting par value of the shares;
- two or more companies, on their dissolution without going into liquidation, transfer all of their assets and liabilities to a new company that they establish in exchange for their shareholders being issued with shares in the new company's capital and, potentially, in exchange for cash, which should not exceed 10% of the nominal value of the shares or, in the absence of a nominal value, of the accounting par value of the shares; or
- a limited liability company, on its dissolution without going into liquidation, transfers all of its assets and liabilities to a company holding all the shares representing its capital.
Local mergers are governed by sections 198-200 of the Companies Law.
The relevant formalities include the passing of a resolution of the absorbing company’s board approving the merger and the proposed deed of arrangement, which is then put before shareholders for approval and ratification. A deed of arrangement is entered into, accounts are prepared and consent from creditors, if any, are obtained. The next step is all merger documents, together with the constitutional documents of the absorbing company, are attached as exhibits to a petition that is filed with the relevant district court.
Once the court issues the court order, every company (absorbed or acquiring), participating in the merger is obliged to submit to the Registrar of Companies within seven (7) days from the date of issue, a copy of the court order accompanied by the merger plan. The Registrar of Companies will proceed with issuing the certificate of dissolution for the company being absorbed and dissolved.
Our team will be happy to assist you with in respect to the above, and particularly to assist you in the preparation of the below:
- Overseeing all the procedure concerning the merger;
- Providing legal advise;
- Drafting of all corporate documents including, inter alia, the merger plan, the explanatory report ;
- Drafting, preparation and submission of the application for Court Order
Should you have any other queries, do not hesitate to contact us.