Insights: Cross Border Mergers of Cyprus Limited Liability Companies

Following the implementation of Directive 2005/56/EC (Cross-border Mergers Directive) into local law by Law 2 of 186(I) of 2007, Cyprus Companies Law, Cap. 113 now provides the framework for cross-border mergers of limited liabilities companies, where at least one of the merging limited liability companies is a Cyprus company or where the limited liability company resulting from the cross-border merger is a Cyprus company.

Under Cyprus Law, a “merger” of limited liability companies, means

(a) one or more limited liability companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to another existing company – the acquiring company – in exchange for the issue to their members of securities or shares representing the capital of that acquiring company and, if applicable, a cash payment not exceeding 10% of the nominal value, or, in the absence of a nominal value, of the accounting par value of those securities or shares; or

(b) two or more limited liability companies, on being dissolved without going into liquidation, transfer all their assets and liabilities to another limited liability company that they form – the new company – in exchange for the issue to their members of securities or shares representing the capital of that new company and, if applicable, a cash payment not exceeding 10% of the nominal value, or in the absence of a nominal value, of the accounting par value of those securities or shares; or

(c) a limited liability company, on being dissolved without going into liquidation, transfers all its assets and liabilities to the limited liability company holding all the securities or shares representing its
capital.

It should be noted that cross-border mergers are only allowed between types of companies which may merge under the provisions of national law of the relevant Member States. Every Cyprus company may take part in a cross-border, except, limited liability companies by guarantee and companies under liquidation.

How can we help?

We have acted or advised in relation to numerous mergers and acquisitions, of both local and international character. We can assist and provide advice with regards to all aspects of mergers. In particular we can assist in:

• structuring and control of mergers, acquisitions and joint ventures;
• cross-border transactions;
• contract drafting and review;
• legal, financial and tax due diligence;
• share and asset acquisition and management;
• corporate dispute resolution.

Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.