Mergers are complex transactions that require careful planning and legal compliance. One of the most common methods for effecting a merger is through the Summary Approval Procedure (SAP), which streamlines the process while ensuring that all necessary legal and financial considerations are addressed.

In his session, Corporate Structuring Update - Company Law Essentials for Accountants, Michael Moore outlines the key steps involved in preparing for a merger and the essential documents required to complete the process effectively.

Preparing for a Merger

Before proceeding with a merger, it is important to consider various practical and legal aspects to ensure a smooth transition. Here are the key areas to focus on:

1. Directors’ Approval and Solvency Declaration
   The directors of the merging companies must be comfortable signing a declaration of solvency. If they are hesitant or concerned about financial stability, they have the option to seek approval from the High Court instead of proceeding with SAP.
2. Third-Party Consents

• If the merging companies have existing banking arrangements, it is crucial to verify whether bank consent is required to complete the merger.

• If the companies own registered land or buildings in Ireland, property transfers occur automatically by operation of law, requiring only a name change filing with the Property Registration Authority.

1. Foreign Assets Consideration

• While Irish legislation governs domestic mergers, foreign assets may not automatically transfer under the merger process. Companies must seek local legal advice to confirm the recognition of the merger in foreign jurisdictions such as Germany or France.

1. Employee Rights and Consultation

• Employees moving between entities as part of the merger are entitled to notification and consultation under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).

• A minimum of 30 days’ notice must be provided, and employees retain their existing employment terms, conditions, and years of service.

1. Review of Commercial Contracts

• Contracts governed by foreign laws must be examined to determine whether they will automatically transfer under the merger or require formal assignment.

• Consultation with local legal advisors may be necessary for contracts governed by non-Irish jurisdictions.

1. Regulatory Filings

• Merger filings must be completed within 21 days to ensure compliance with statutory requirements and to make the merger publicly known.

Key Documents Required to Effect the Merger

To legally execute a merger via the Summary Approval Procedure (SAP), several key documents must be prepared and submitted:

1. Common Draft Terms of Merger

• This document outlines the basis of the merger, including details of the merging entities, asset and liability transfers, and share issuance (if applicable).

• It specifies the relative values of the merging companies and the number of shares to be issued in the successor entity.

1. Declaration of Solvency

• A formal declaration confirming that the merging companies are solvent and can meet their financial obligations.

• This declaration is signed by the directors and forms a critical part of the SAP process.

1. Shareholders’ Resolution

• Shareholder approval is required for the merger to proceed.

• A resolution must be passed at a general meeting, confirming that shareholders agree to the merger terms.

1. Display of Merger Documents

• Under Irish company law, the Common Draft Terms of Merger, along with the last three financial statements of the merging companies, must be made available to shareholders for at least 30 days.

• These documents are displayed at the registered office of the companies or on their websites to ensure transparency.

1. Final Merger Filings

• Once the 30-day display period has expired, the necessary filings must be submitted to the Companies Registration Office (CRO) to officially complete the merger.

• After submission, the merger becomes legally binding, and the surviving entity assumes control over the assets and liabilities of the absorbed company.

Effecting a merger via the Summary Approval Procedure (SAP) provides a streamlined approach, but it still requires careful attention to financial, legal, and regulatory considerations. Companies must ensure that they obtain necessary consents, comply with foreign asset regulations, and protect employee rights. By preparing the required documentation—including the Common Draft Terms of Merger, Declaration of Solvency, and Shareholders’ Resolution—companies can execute a successful merger while maintaining compliance with Irish company law.

For the full session, please click here. Michael Moore covers the following topics during this course:

• Distributions and Distributable Reserves
• Share Exchanges
• Summary Approval Procedure
• Legal Mergers
• Capital Reductions, Directors Loans and Financial Assistance

The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.