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.