Cross-Border Merger of Perfect Style Motions Limited with and into PSM3 GmbH

Philipp Simon recently acted on the cross-border merger of a UK limited company into a German limited company (GmbH) under the Companies (Cross Border Mergers) Regulations 2007, which go back to the Merger Directive (Directive 2005/56/EC) (the Directive).

Legal Background

By virtue of the Directive, companies are able to achieve a “true” merger across the boundaries of nation states, in which all assets, liabilities and employees of the transferor company are transferred to the transferee company. Without the need for a liquidation process, the transferor company ceases to exist.

The Directive requires that, in order for there to be a cross-border merger, there must be a genuine “cross-border” element to the merger, i.e. the merger must involve at least two companies governed by the laws of different Member States.

Three types of merger are permitted: merger by absorption; merger by absorption of a wholly owned subsidiary; and merger by formation of a new company.

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