Mergers & Acquisitions - Malta Law
In the last few decades, the importance of mergers and acquisitions as a tool for business has arisen drastically. In a fluctuating, competitive corporate world, it is vital for businesses and corporate structures to remain dynamic while always looking towards strategically employing corporate law tools to expand, improve and maximise corporate structures. This is also a fact within the Malta law and business sphere.
There are various considerations as to why proceeding with a merger may result as quite useful. A change in corporate structure through merger may be considered to expand or consolidate one’s business structure. This may result in further efficiency through a consolidated infrastructure and strategic financial planning that maximises profit and minimizes avoidable expenses.
In Malta, mergers and acquisitions are thoroughly considered in order to affect productive tax consolidation and benefits and this through an ancillary beneficial tax regime. It is valid to note that Malta’s mergers and acquisitions legal framework became significantly relevant following Malta’s accession to the European Union in 2004 wherein the cross-border element of corporate structures extended through multiple member states became a valid additional notion. Indeed, the legal framework currently allows for the traditional two-fold layers of amalgamation of companies being:
- Merger by acquisition; and
- Merger by formation of a new company.
While it can be said that the practical processes of both types of mergers and acquisitions are similar, the end effect of both is quite distinct, as can be presumed from their names. Indeed, in a merger by acquisition, a company acquires all the assets and liabilities or another company in exchange for the issue to the shareholders of the company being acquired of shares in the acquiring company. On the other hand, a merger by formation of a new company occurs whereby two (or more) companies deliver to a company which is set up between them, all their assets and liabilities in exchange for the issue to the shareholders of the merging companies of shares in the new company. A cash payment may also be involved in both, subject to restrictions.
M&A Malta and the EU
Malta law has also transposed the Cross Border Mergers Directive and allows for mergers and acquisitions involving companies formed and registered in separate member states, and therefore different governing laws. In this way, as long as at least one of the involved merging companies, or the company resulting from the merger, is registered in Malta, such mergers and acquisitions may be regulated efficiently and clearly, and in line with harmonised European Union law.
In this toolbox for mergers and acquisitions, different aspects, under Malta law, shall be investigated and illustrated in further detail in order to provide a better comprehensive picture as to mergers and acquisitions, and their vital contribution towards the effectivity of business.
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