113. Application and interpretation of Part 8

(1) This Part applies only to the extent that a Merging Company is a Public Company.

(2) In this Part:

1. (a) a reference to a Merging Body is a reference to a body proposing to merge with any 1 or more of the following:
2. (i) a Company or Recognised Company;

(ii) a Body Corporate (other than a Recognised Company) incorporated outside the AIFC;

(and Merging Company has a corresponding meaning); and

1. (b) a reference to a Merged Body is a reference to the body resulting from a merger under this Part, which may be:
2. (i) a new Company or a new Body Corporate incorporated outside the AIFC (a New Body); or

(ii) an existing Company or an existing Body Corporate incorporated outside the AIFC (a Survivor Body);

(and Merged Company, New Company and Survivor Company have corresponding meanings).

(3) This Part does not apply to any Foreign Company that is declared to be an excluded body under the Rules.

(4) Chapter 11 (Protection of Minorities in Takeovers) of Part 7 (Private Companies and Public Companies) does not prevent the acquisition or takeover of a Merging Body by another Merging Body by way of a merger under this Part.

(5) This Part does not apply to a Company if the Company is being wound up under the AIFC Insolvency Regulations.

(6) In this Part:

Group Merger means a merger in which the Merging Bodies are:

1. (a) a Holding Company and 1 or more Wholly-Owned Subsidiaries of the Holding Company; or
2. (b) a Wholly-Owned Subsidiary of a Body Corporate and 1 or more of the following:
3. (i) the Body Corporate;

(ii) 1 or more other Wholly-Owned Subsidiaries of the Body Corporate.

(7) For this Part, the Rules may prescribe the following:

1. (a) pre-registration steps–if all Merging Bodies are Companies;
2. (b) pre-registration steps–if a Merged Body is not a Company;
3. (c) pre-registration steps–applicable in all other cases; and
4. (d) any other procedures or matter that is required to assist or facilitate a merger to which this Part applies.

114. Merger agreement

(1) For the purposes of a merger, each Merging Body must enter into an agreement with each other Merging Body. The agreement (the merger agreement) must state the terms of the merger, including the following:

• (a) details of the proposed Merged Body, including the following:

(i) whether it is to be a Survivor Body or a New Body;

(ii) whether it is to be a Company, Recognised Company or another Body Corporate incorporated outside the AIFC;

(iii) the names and addresses of the Persons who are proposed to:

(A) be its Directors; or

(B) manage it, if it is to be a Body Corporate that does not have Directors;

• (b) details of any arrangements necessary to complete the merger and to provide for the management of the Merged Body;
• (c) details of any payment, other than the information specified in subsection (2), proposed to be made to a Shareholder, member or Director of a Merging Company;
• (d) in relation to the transfer of any Securities of a Merging Company, the information specified in subsection (2).

(2) For subsection (1)(c) and (d), the specified information in relation to the transfer of any Securities of a Merging Company is:

• (a) if any Securities are to be converted into Securities of the Merged Body—how the conversion is to be made; or
• (b) otherwise, what the holders are to receive instead, and how and when they are to receive it.

(3) If the Merged Body is to be a New Company, the merger agreement must also set out:

• (a) the proposed Articles of Association of the New Company; and
• (b) a draft of any other Document or information that would be required to be delivered to the Registrar (however described) if that New Company were to be incorporated under these Regulations otherwise than by merger.

(4) If the Merged Body is to be a Survivor Company, the merger agreement must also:

• (a) if any amendments to the Articles of Association of the Survivor Company are proposed—include details of the amendments; and
• (b) if any person is to become, or cease to be, a Director of the Survivor Company on the merger—state the name and address of each such person.

(5) If Shares of a Merging Body are held by or on behalf of another Merging Body and the Merged Body is to be a New Company:

• (a) the merger agreement must provide for the cancellation of the Shares, without any repayment of capital, when the merger is completed; and
• (b) provision may not be made in the merger agreement for the conversion of the Shares into Securities of the New Company.

(6) A merger agreement may provide that, at any time before the completion of the merger, the agreement may be terminated by any 1 or more of the Merging Companies, even though the merger has been approved by the Shareholders or members of all or any of those Merging Companies.

(7) If an agreement is terminated under the terms of a merger agreement referred to in subsection (6), this Part does not require or authorise any further steps to be taken to complete the merger.

(8) The requirements of this section for a merger agreement do not apply in respect of a Group Merger.

115. Resolutions and certificates for merger

(1) Before notice is given of a meeting of a Merging Company to approve a merger agreement under section 116 (Approval of merger), the Directors of the Company must pass a Directors’ resolution that, in the opinion of the Directors voting for the resolution, the merger is in the best interests of the Company. The resolution must contain either a solvency statement referred to in subsection (2) or a statement referred to in subsection (4).

(2) If the Directors voting for the resolution under subsection (1) are satisfied on reasonable grounds that they can properly make a solvency statement in respect of the Company, the resolution must include a statement that they are so satisfied.

(3) For this section, a solvency statement is a statement that, having made full inquiry into the affairs of the Company, the person making the statement reasonably believes that the Company is, and will remain until the merger is completed, able to discharge its Liabilities as they fall due.

(4) If subsection (2) does not apply, the resolution must contain a statement that the Directors voting for it are satisfied on reasonable grounds that there is a reasonable prospect of obtaining the permission of the Court under section 119 (Company to apply to Court if solvency statement not made).

(5) After the resolution under subsection (1) is passed, but before notice is given as mentioned in that subsection, each Director who voted in favour of it must sign a certificate setting out the grounds for the solvency statement under subsection (2) or the statement under subsection (4), as the case may be.

(6) Before the notice is given as mentioned in subsection (1) each relevant person under subsection (7) must sign a certificate stating:

• (a) that, in the person’s opinion, the Merged Body will be able to continue to conduct business and discharge its Liabilities as they fall due for 12 months after the day the certificate is signed or the merger is completed, whichever is the later; and
• (b) the grounds for that opinion, having particular regard to:

(i) the prospects of the Merged Body; and

(ii) the proposals in any merger agreement in relation to the management of the Merged Body’s business, or any proposals in the Special Resolutions proposed to be approved under section 116 in relation to that matter; and

(iii) the amount and character of the financial resources that will, in the person’s opinion, be available to the Merged Body.

(7) For subsection (6), a relevant person is any of the following:

• (a) the persons proposed in any merger agreement, or in a Special Resolution for a Group Merger:

(i) to be Directors of the Merged Body; or

(ii) to manage the Merged Body, if it is to be a Body Corporate that does not have Directors;

• (b) if none of the Directors of the Merging Bodies is a person mentioned in paragraph (a)—the persons who signed the certificate or statement mentioned in subsection (5).

116. Approval of merger

(1) Each Merging Body that is a Company must submit the merger for approval by a Special Resolution of the Company and, if there is more than 1 class of Shareholders, for approval by a Special Resolution of a separate meeting of each class.

(2) Notice of each meeting:

1. (a) must be accompanied by:
2. (i) a copy or summary of any merger agreement; and

(ii) copies of the proposed Articles of Association or other Constitutional Documents for the Merged Body or a summary of the principal provisions of those Documents; and

(iii) if the notice is accompanied by a summary mentioned in subparagraph (i) or (ii)—information about how a copy of the summarised Document may be inspected by the Shareholders of the Company; and

(iv) a copy of each certificate or statement signed under section 115(5) and (6) (Resolutions and certificates for merger) in relation to the merger; and

1. (v) a statement of the material interests in the merger of the Directors of each Merging Body and the persons managing any Merging Body that does not have Directors; and

(vi) any further information that a Shareholder would reasonably require to make an informed decision about the merger; and

1. (b) must contain sufficient information to alert Shareholders to their right to apply to the Court under section 117 (Objection to merger by Shareholders).

(3) A Special Resolution to approve a Group Merger must:

1. (a) provide that the capital accounts of each Merging Body are to be added to the capital accounts of the Merged Body; and
2. (b) specify any changes to the Articles of Association of the Merged Body that are to take effect on the merger; and
3. (c) state the names and addresses of the persons who are proposed to be the Directors of the Merged Body after the merger; and
4. (d) provide that the Shares of each Merging Body are to be cancelled without any repayment of capital.

(4) A merger is approved under this section when all the Special Resolutions mentioned in subsection (1) have been passed in respect of all the Merging Bodies that are Companies.

(5) A merger may not be completed unless it is approved under this section.

117. Objection to merger by Shareholders

(1) A Shareholder of a Merging Company may apply to the Court for an order under section 175 (Orders for unfair prejudice to Shareholders) on the ground that the merger would unfairly prejudice the interests of the Shareholder.

(2) An application must not be made:

• (a) more than 28 days after the day the merger is approved under section 116 (Approval of merger); or
• (b) by a Shareholder who voted in favour of the merger.

118. Notice to Creditors of merger

(1) No later than 28 days after the day a merger is approved under section 116 (Approval of merger), each Merging Body that is a Company must send Written notice to each of its Creditors who, after its Directors have made reasonable enquiries, is known to the Directors to have a claim against the Company exceeding U.S. $5,000.

(2) The notice must state:

1. (a) that the Company intends to merge, in accordance with this Part, with 1 or more Bodies Corporate specified in the notice; and
2. (b) that a copy of the merger agreement and each Special Resolution of the Company is available to Creditors from the Company, free of charge, on request.

(3) If section 119 (Company may apply to Court if solvency statement not made) applies to the merger, the notice must also:

1. (a) state that a Merging Company has applied or will apply for the permission of the Court under that section; and
2. (b) state that any Creditor of any of the Merging Bodies may request the Company making the application to send a copy of the application to the Creditor; and
3. (c) set out information about:
4. (i) how a Creditor may contact the Company making the application or a Person representing it in that application; and

(ii) the effect of section 119(4), including the date of the application to the Court, if known at the time of the notice.

(4) If section 119 does not apply to the merger, the notice must also state that any Creditor of the Company may:

1. (a) give notice to the Company of the Creditor’s objection to the merger within 28 days after the day the notice is published under subsection (5); or
2. (b) require the Company to notify the Creditor if any other Creditor of the Company applies to the Court for an order restraining the merger or modifying the merger agreement.

(5) The Company must publish the contents of the notice in the Appointed Publications or in another way approved by the Registrar.

(6) The notice must be published:

1. (a) no later than 28 days after the day the merger is approved under section 116; or
2. (b) as soon as practicable after the Company sends the last of the notices under subsection (1), whichever occurs earlier.

119. Company to apply to Court if solvency statement not made

(1) This section applies to a merger if a certificate signed by the Directors of any of the Merging Companies under section 115(5) (Resolutions and certificates for merger) does not contain the solvency statement mentioned in section 115(3).

(2) The merger may not be completed unless the Court permits the merger on the ground that the merger would not be unfairly prejudicial to the interests of any Creditor of any of the Merging Bodies.

(3) A Merging Company to which a certificate mentioned in subsection (1) relates, or all such Companies jointly if there are more than 1, must as soon as is practicable after the proposed merger is approved under section 116 (Approval of merger):

1. (a) apply to the Court for permission for the merger; and
2. (b) send a copy of the application to:
3. (i) any Creditor known to the Directors, after having made reasonable enquiries, to have a claim against any of the Merging Bodies exceeding U.S. $5,000; and

(ii) any other Creditor of any of the Merging Bodies who request a copy from that Company; and

(iii) the Registrar.

(4) The Court must not hear the application for at least 28 days after the day it is made to the Court.

120. Objection by Creditor if solvency statements made

(1) This section applies to a merger if each certificate signed by the Directors of the Merging Companies under section 115(5) (Resolutions and certificates for merger) contains the solvency statement mentioned in section 115(3).

(2) A Creditor of a Merging Company who objects to the merger:

1. (a) may, within 28 days of after the day the notice under section 118(5) (Notice to Creditors of merger) is published, give notice of the Creditor’s objection to the Company; and
2. (b) if the Creditor’s claim against the Merging Company is not discharged—the Creditor may, within 28 days after the day the Creditor gives notice of the Creditor’s objection to the Company, apply to the Court for an order restraining the merger or modifying the merger agreement.

(3) If a Creditor makes an application under subsection (2)(b), the Company must, within a reasonable time after receiving a copy of the application, send a copy of it to each other Creditor:

1. (a) to whom a notice was sent under section 118(1); or
2. (b) who has made a request under section 118(3)(b); or
3. (c) who has given notice of objection under subsection (2)(a); or
4. (d) to whom the Court orders that a copy should be sent.

(4) If, on an application under subsection (2)(b), the Court is satisfied that the merger would unfairly prejudice the interests of the applicant or of any other Creditor of the Merging Company, the Court may make the order that it considers appropriate in relation to the merger, including, for example, an order:

1. (a) restraining the merger; or
2. (b) modifying the merger agreement (if any) or Special Resolution in the way specified in the order.

(5) Subsection (6) applies if the Court is considering making an order under subsection (4)(b) to modify a merger agreement or Special Resolution that does not contain a provision in accordance with section 114(6) (Merger agreement) allowing each of the Merging Companies to terminate the merger following the modification.

(6) The Court must not make the order unless:

1. (a) the order also inserts the provision mentioned in subsection (5) in the merger agreement or Special Resolution; and
2. (b) the Court is satisfied that each Merging Company will have an adequate opportunity to reconsider whether to proceed with the merger following the modification.

121. Consent of Registrar required for mergers involving bodies other than Companies

(1) If 1 or more of the Merging Bodies are not Companies:

1. (a) the Merging Bodies must apply jointly to the Registrar for consent to the merger; and
2. (b) the merger may not be completed unless the Registrar consents and any conditions of the consent are complied with.

(2) The application for consent must not be made until after the day of the last publication of a notice under section 118(5) (Notice of Creditors of merger).

(3) The application must be accompanied by:

1. (a) a copy of any merger agreement and the Special Resolutions passed under section 116 (Approval of merger); and
2. (b) if any Merging Body is a Company—a copy, in respect of each Company, of:
3. (i) a copy of the resolution passed under section 115(1) (Resolutions and certificates for merger), together with, if the information is not contained in the resolution, a list identifying the Directors who voted in favour of the resolution; and

(ii) the certificates signed under sections 115(5) and (6); and

1. (c) a copy of the notice to Creditors published under section 118(5), with the date of its publication; and
2. (d) information, as at the time of the application under this section, about:
3. (i) any application made by a Shareholder to the Court under section 117 (Objection to merger by Shareholders); or

(ii) if no application has been made to the Court under that section—the date by which an application may be made to the Court under that section.

(4) If section 119 (Company may apply to Court if solvency statement not made) applies to the merger:

1. (a) the application under this section must also be accompanied by information, as at the time of that application, about the application made, or to be made, to the Court under that section; and
2. (b) the applicants must:
3. (i) keep the Registrar informed of the progress of the application under that section; and

(ii) provide, when available, a copy of the Court order permitting the merger.

(5) If section 120 (Objection by Creditor if solvency statement made) applies to the merger, the application under this section must also be accompanied by:

1. (a) information, as at the time of the application under this section, about:
2. (i) any notice of objection given by a Creditor under section 120(2)(a); or

(ii) if no notice of objection has been given—the date by which a notice of objection may be given; and

1. (b) evidence satisfactory to the Registrar that the merger would not be unfairly prejudicial to the interests of any Creditor of any Merging Body that is a Company.

(6) If the Merged Body is to be a Company, the application must also be accompanied by:

1. (a) the consent of the proposed Directors to act as Directors; and
2. (b) a copy of its proposed Articles of Association, unless it is to be a Survivor Company and there are no amendments proposed to its Articles of Association.

(7) If 1 more of the Merging Companies is a Foreign Company, the application must also be accompanied by evidence satisfactory to the Registrar, in respect of each Foreign Company, that:

1. (a) the laws of the jurisdiction in which the Foreign Company is incorporated do not prohibit either or both of:
2. (i) the proposed merger; or

(ii) if the Merged Body is to be a new Body Corporate incorporated in that jurisdiction—the incorporation of that Body Corporate because of the merger; and

1. (b) if those laws or the constitution of the Foreign Company require that an authorisation be given for the application under this section or for the merger—the authorisation has been given; and
2. (c) if the Foreign Company is not to be a Survivor Company—the Foreign Company will, in due course after the completion of the merger, cease to be a Body Corporate incorporated under the law of the jurisdiction in which it is presently incorporated.

(8) If the Merged Body is to be a Foreign Company, the application must also be accompanied by evidence satisfactory to the Registrar that the laws of the jurisdiction in which the Merged Body is to be incorporated provide that on the merger:

1. (a) the property and rights to which the transferor bodies were entitled immediately before the merger will become the property and rights of the Merged Body; and
2. (b) the Merged Body will become subject to any criminal and civil liabilities, and any contracts, debts and other obligations, to which the transferor bodies were subject immediately before merger; and
3. (c) any legal proceedings that, immediately before the merger, were pending by or against any of the transferor bodies may be continued by or against the Merged Body.

(9) Subsections (10) and (11) apply unless, at the time of the application under this section:

1. (a) there has been no objection by a Shareholder or by a Creditor to the merger; and
2. (b) the time for making any objection has elapsed.

(10) The applicants must:

1. (a) notify the Registrar of any objection of which they become aware after the application; and
2. (b) notify the Registrar of the result once any objection, whenever made, has been disposed of; and
3. (c) provide to the Registrar any further information or Document reasonably required by the Registrar in connection with any objection.

(11) Until the applicants have complied with subsection (10), the Registrar:

1. (a) must not make any decision on the application other than to refuse consent on grounds unconnected to an objection; and
2. (b) may, in respect of the application, take any other action short of making a decision, or take no further action.

(12) In subsections (9), (10) and (11):

objection means:

1. (a) the making by a Shareholder of any Merging Company of an application to the Court under section 117; or
2. (b) the giving of notice of objection under section 120(2)(a) (Objection by Creditor if solvency statement made) by a Creditor of any Merging Company.

123. Grounds for opinion relating to merger

(1) A Person signing a certificate prescribed by the Rules under section 113(7) (Application and interpretation for Part 8) or a certificate under section 115 (Resolutions and certificates for merger) must have reasonable grounds for any opinion stated in the certificate.

(2) Contravention of this section is punishable by a fine.