CROSS-BORDER DIVISIONS OF LIMITED LIABILITY COMPANIES REGULATIONS

COMPANIES

SUBSIDIARY LEGISLATION 386.26

CROSS-BORDER DIVISIONS OF LIMITED

LIABILITY COMPANIES REGULATIONS

31st January 2023

LEGAL NOTICE 26 of 2023, as amended by Legal Notice 68 of

2024.

The title of these regulations is the Cross-border

Divisions of Limited Liability Companies Regulations.

CROSS-BORDER DIVISIONS OF LIMITED LIABILITY

COMPANIES REGULATIONS, 2023

Application by Board of Directors to obtain a pre-division certificate in

terms of Regulation 17(1)

Form DIVISION

Company Reg. No. ..............................

Name of Company .......................................................................

Delivered by ....................................................................

To the Registrar of Companies

I/We (a)………………………………..................hereby submit

the application in accordance with Regulation 17(1) of the Cross-

Border Divisions of Limited Liability Companies Regulations, 2022, in

order

to

obtain

the

pre-division

certificate

of

(b)………………………………….. having registration number (c)

…………………………………

I / We (d) confirm that the company has followed the procedures

provided for by the Cross-Border Divisions of Limited Liability

Companies Regulations, 2022, and the documents referred to in terms

of Regulation 17(2) are hereby attached.

Employee consultation in terms of the applicable legislation

under the employment law framework stipulated in regulation 7(10)

has commenced/is not applicable (e).

Signature/s................................................

Director/s

Dated this.................... day of......................... of the year ...........

This form must be completed in typed form.

(a)

Delete as necessary and insert name and surname of

director/s

(b)

Insert company name

(c)

Insert company registration number

(d)

Delete as necessary

(e)

Delete as necessary

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The scope of these regulations is to transpose and

implement Directive 2019/2121/EU of the European Parliament and of

the Council of 27 November 2019 amending Directive (EU) 2017/

1132 as regards cross-border conversions, mergers and divisions.

Added by: 

L.N. 68 of 2024.

Administrative Penalties

Regulation

Default

Administrative

Daily

Penalty

Administrative

Penalty

14(1)

Failure to file

Euro 465.87

Euro 23.29

with

the

Registrar

the

extraordinary

resolution

approving the

cross-border

division

In these regulations, unless the context otherwise

requires

"Act" means the Companies Act;

"company" means a limited liability company formed in

accordance with Maltese law, any other limited liability

company listed in Annex II of Directive 2017/1132/EU and any

other body corporate formed and incorporated or registered

under the laws of any other approved country or jurisdiction

which is similar in nature to a company under Maltese

legislation that carries out a cross-border division;

"company being divided" means a company which, in the

process of a cross-border division, transfers all its assets and

liabilities to two (2) or more companies in the case of a full

division, or transfers part of its assets and liabilities to one (1)

or more companies in the case of a partial division or division

by separation;

"Directive 2002/14/EC" means Directive 2002/14/EC of

the European Parliament and of the Council of 11 March 2002

establishing a general framework for informing and consulting

employees in the European Community.

"Directive 2009/38/EC" means Directive 2009/38/EC of

the European Parliament and of the Council of 6 May 2009 on

the establishment of a European Works Council or a procedure

in Community-scale undertakings and Community-scale groups

of undertakings for the purposes of informing and consulting

employees;

"Directive 2014/59/EU" means Directive 2014/59/EU of

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the European Parliament and of the Council of 15 May 2014

establishing a framework for the recovery and resolution of

credit institutions and investment firms and amending Council

Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC,

2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/

EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and

(EU) No 648/2012, of the European Parliament and of the

Council;

"Directive 2017/1132/EU" means Directive 2017/1132/

EU of the European Parliament and of the Council relating to

certain aspects of company law;

"Directive 2019/2121/EU" means Directive 2019/2121/

EU of the European Parliament and of the Council of 27

November 2019 amending Directive 2017/1132/EU as regards

cross-border divisions, mergers and divisions;

"dividing companies" means all the companies taking part

in a cross-border division including a recipient company;

"division" means an operation whereby

(a)

a company being divided, on being

dissolved without going into liquidation, transfers all its

assets and liabilities to two (2) or more recipient

companies, in exchange for the issue to the members of

the company being divided of securities or shares in the

recipient companies and, if applicable, a cash payment

not exceeding 10% of the nominal value, or, in the

absence of a nominal value, a cash payment not exceeding

10% of the accounting par value of those securities or

shares ("full division");

(b)

a company being divided transfers part of

its assets and liabilities to one (1) or more recipient

companies, in exchange for the issue to the members of

the company being divided of securities or shares in the

recipient companies, in the company being divided or in

both the recipient companies and the company being

divided and, if applicable, a cash payment not exceeding

10% of the nominal value or, in the absence of a nominal

value, a cash payment not exceeding 10% of the

accounting par value of those securities or shares ("partial

division"); or

(c)

a company being divided transfers part of

its assets and liabilities to one (1) or more recipient

companies, in exchange for the issue to the company

being divided of securities or shares in the recipient

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companies ("division by separation").

"recipient company" means a company newly formed in

the course of a cross-border division.

(1)

These regulations shall apply to cross-border

divisions of limited liability companies formed in accordance with the

law of a Member State or EEA State and having their registered office,

central administration or principal place of business within the

Community provided that at least two (2) of the limited liability

companies involved in the division are governed by the laws of

different Member States or EEA States.

(2)

These regulations shall also apply to cross-border

divisions of limited liability companies formed in accordance with the

law of any other approved country or jurisdiction provided that at least

two (2) of the limited liability companies involved in the division are

governed by the laws of different approved countries or jurisdictions

Provided further that for the purpose of divisions

regulated by these regulations, at least one (1) of the dividing

companies must be registered in Malta.

(3)

Notwithstanding the definition of "division", these

regulations shall also apply to cross-border divisions where the law of

at least one (1) of the countries or jurisdictions concerned allows the

cash payment referred to in paragraphs (a) and (b) of the definition to

exceed 10% of the nominal value or, in the absence of a nominal value,

10% of the accounting par value of the securities or shares

representing the capital of the recipient companies.

(4)

These regulations shall apply to companies which are

(a)

subject to preventive restructuring frameworks; or

(b)

the subject of crisis prevention measures as

defined in point (101) of Article 2(1) of Directive 2014/59/EU.

(5)

These regulations shall not apply

(a)

to cross-border divisions involving a company the

object of which is the collective investment of capital provided

by the public, which operates on the principle of risk-spreading

and the units of which are, at the holders’ request, repurchased

or redeemed, directly or indirectly, out of the assets of that

company. Action taken by such a company to ensure that the

stock exchange value of its units does not vary significantly

from its net asset value shall be regarded as equivalent to such

repurchase or redemption;

(b)

to a company which is subject to resolution tools,

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powers and mechanisms provided for in Title IV of Directive

2014/59/EU;

(c)

to a company which is the subject of insolvency

proceedings; or

(d)

to a company which is the subject of liquidation

proceedings.

(1) Where the company being divided is a company

registered in Malta, these regulations shall govern those parts of the

procedures and formalities to be complied with in connection with the

cross‐border division in order to obtain the pre-division certificate.

(2)

Where the recipient company is a company registered in

Malta, these regulations shall govern those parts of the procedures and

formalities to be complied with following receipt of the pre-division

certificate issued by the country or jurisdiction of the company being

divided.

Part I: Procedure and formalities to be applied when the company

being divided is registered in Malta

(1)

The Board of Directors of the Maltese company

being divided shall draw up the draft terms of a cross-border division.

The draft terms of a cross-border division shall include at least the

following particulars

(a)

the legal form and name of the company being

divided and the location of its registered office, and the legal

form and name proposed for the new companies resulting from

the cross-border division and the proposed location of their

registered offices;

(b)

the ratio applicable to the exchange of securities or

shares representing the companies’ capital and the amount of

any cash payment, where appropriate;

(c)

the terms for the allotment of securities or shares

representing the capital of the recipient companies or of the

company being divided;

(d)

the proposed indicative timetable for the cross-

border division;

(e)

the likely repercussions of the cross-border

division on employment;

(f)

the date from which the holding of securities or

shares representing the companies' capital shall entitle the

holders to share in profits, and any special conditions affecting

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that entitlement;

(g)

the dates from which the transactions of the

company being divided shall be treated for accounting purposes

as being those of the recipient companies;

(h)

any special advantages granted to members of the

administrative, management, supervisory or controlling bodies

of the company being divided;

(i)

the rights conferred by the recipient companies on

members of the company being divided enjoying special rights

or on holders of securities other than shares representing the

divided company capital, or the measures proposed concerning

them;

(j)

the instruments of constitution of the recipient

companies, where applicable, and the statutes if they are

contained in a separate instrument, and any changes to the

instrument of constitution of the company being divided in the

case of a partial division or a division by separation;

(k)

where appropriate, information on the procedures

by which arrangements for the involvement of employees in the

definition of their rights to participation in the recipient

companies are determined;

(l)

a precise description of the assets and liabilities of

the company being divided and a statement of how those assets

and liabilities are to be allocated between the recipient

companies, or are to be retained by the company being divided

in the case of a partial division or a division by separation,

including provisions on the treatment of assets or liabilities not

explicitly allocated in the draft terms of a cross-border division,

such as assets or liabilities which are unknown on the date on

which the draft terms of cross-border division are drawn up;

(m) information on the evaluation of the assets and

liabilities which are to be allocated to each company involved

in the cross-border division;

(n)

the date of the accounts of the company being

divided used to establish the conditions of the cross-border

division;

(o)

where appropriate, the allocation to the members

of the company being divided of shares and securities in the

recipient companies, in the company being divided or in both,

and the criterion upon which such allocation is based;

(p)

details of the offer of cash compensation for

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members;

(q)

any safeguards offered to creditors, such as

guarantees or pledges; and

(r)

the electronic address to be used by members for

the purposes of exercising their right in accordance with

regulation 12(2).

(2)

Where any one of the dividing companies is not or shall

not be formed, incorporated or registered in a Member State, a reasoned

opinion of one or more practising advocates confirming that the

proposed cross-border division is permitted by the laws of the relevant

jurisdiction must be attached to the draft terms of cross-border division.

(3)

The draft terms of a cross-border division shall be signed

by one (1) director if the company has a sole (1) director or by two (2)

directors if the company has two (2) or more directors. Furthermore,

the draft terms of a cross-border division may be signed in counterparts

and such counterparts together shall constitute one (1) and the same

document.

(1)

The Board of Directors of the Maltese company

being divided shall draw up a report for members and employees,

explaining and justifying the legal and economic aspects of the cross-

border division, as well as explaining the implications of the

cross‐border division for employees. It shall, in particular, explain the

implications of the cross-border division for the future business of the

dividing companies.

(2)

The report shall also include a section for members and a

section for employees. The company may decide either to draw up one

(1) report containing those two (2) sections or to draw up separate

reports for members and employees respectively, containing the

relevant section.

(3)

The section of the report for members shall, in particular,

explain the following

(a)

the cash compensation and the method used to

determine the cash compensation;

(b)

the share exchange ratio and the methods used to

arrive at the share exchange ratio, where applicable;

(c)

the implications of the cross-border division for

members; and

(d)

the rights and remedies available to members in

accordance with regulation 12.

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(4)

The section of the report for members shall not be

required where all the members of the company have agreed to waive

that requirement in writing or where the company being divided is a

single-member company;

(5)

The section of the report for employees shall, in

particular, explain the following

(a)

the implications of the cross-border division for

employment relationships, as well as, where applicable, any

measures for safeguarding those relationships;

(b)

any material changes to the applicable conditions

of employment or to the location of the company’s places of

business; and

(c)

how the factors set out in paragraphs (a) and (b)

affect any subsidiaries of the company.

(6)

The reports shall be made available in any case

electronically, together with the draft terms of the cross-border

division, if available, to the members and representatives of the

employees or, where there are no such representatives, to the

employees themselves, not less than six (6) weeks before the date of

the general meeting referred to in regulation 11.

(7)

Where the Board of Directors of the company receives an

opinion on the information referred to in sub-regulations (1) and (5) in

good time from the representatives of the employees or, where there

are no such representatives, from the employees themselves, the

members shall be informed thereof and that opinion shall be appended

to the report.

(8)

The section of the report for employees shall not be

required where a company being divided and its subsidiaries, if any,

have no employees other than those who form part of the said Board or

or other administrative or management bodies of the company or those

of its subsidiaries.

(9)

Where the section of the report for members referred to

in sub-regulation (3) is waived or not required in accordance with sub-

regulation (4) and the section for employees referred to in sub-

regulation (5) is not required under sub-regulation 8, the report shall

not be required.

(10) Sub-regulations (1) to (9) shall be without prejudice to

the provisions of any other law applicable in Malta regarding the

applicable information and consultation rights and procedures

pursuant to Directives 2002/14/EC and 2009/38/EC.

(11)

A report drawn-up in accordance with this regulation

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shall be signed by one (1) director if the company has a sole (1) director

or by two (2) directors if the company has two (2) or more directors.

Furthermore, the directors’ report may be signed in counterparts and

such counterparts together shall constitute one (1) and the same

document.

(1)

The directors of the Maltese company being

divided, or in the case of a company having more than two (2)

directors, the majority of the directors, shall make a written declaration

of solvency to the effect that, on the basis of the information available

to the Board of Directors at the date of the declaration, and after having

made reasonable enquiries, the said Board of Directors is unaware of

any reason why any recipient company and, in the case of a partial

division, the Maltese company being divided, may after the division

takes effect, not be in a position to meet the liabilities allocated to them

under the draft terms of the cross-border division when those liabilities

fall due

Provided that no declaration of solvency shall be required

where the Maltese company being divided is a company which is

undergoing any one of the procedures referred to in regulation 4(4).

(2)

A declaration made in accordance with sub-regulation (1)

shall have no effect for the purposes of these regulations unless

(a)

it is made within the month immediately preceding

the disclosure referred to in regulation 10; and

(b)

it contains a statement of the company’s assets and

liabilities made up to a date not earlier than one (1) month prior

to the disclosure referred to in regulation 10(3). Without

prejudice to regulation 28 a director who makes a declaration of

solvency under this regulation without having reasonable

grounds for the opinion expressed in the said declaration shall

be guilty of an offence and liable on conviction to imprisonment

for a term not exceeding three (3) years or to a fine (multa) of

not more than fifty thousand euro (€50,000), or to both such fine

and imprisonment.

(3)

Without prejudice to regulation 28 a director who

makes a declaration of solvency under this regulation without

having reasonable grounds for the opinion expressed in the said

declaration shall be guilty of an offence and liable on conviction

to imprisonment for a term not exceeding three years or to a fine

(multa) of not more than fifty thousand euro (€50,000), or to

both such fine and imprisonment.

(1)

An expert acting on behalf of the Maltese company

being divided but independent of it and approved by the Registrar, shall

examine the draft terms of a cross-border division and draw up a

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written report for the company’s members. The report shall be made

available to the members not less than one (1) month before the date of

the general meeting referred to in regulation 11.

(2)

The report shall include the expert’s opinion as to

whether the cash compensation and the share exchange ratio are

adequate. When assessing the cash compensation, the expert shall

consider any market price of the shares in the company being divided

prior to the announcement of the division proposal or the value of the

company excluding the effect of the proposed division, as determined

in accordance with generally accepted valuation methods.

(3)

The report shall at least

(a)

indicate the methods used to determine the cash

compensation proposed;

(b)

indicate the methods used to arrive at the share

exchange ratio proposed;

(c)

state whether the methods used are adequate for

the assessment of the cash compensation and the share

exchange ratio, indicate the value arrived at using such methods

and give an opinion on the relative importance attributed to

those methods in arriving at the value decided on; and

(d)

describe any special valuation difficulties which

have arisen.

(4)

The expert shall be entitled to obtain from the company

being divided all information necessary for the discharge of his duties.

(5)

Neither an examination of the draft terms of cross-border

division by an independent expert nor an independent expert report

shall be required if all the members of the company being divided have

so agreed or if the company being divided is a single-member

company.

(1)

Without prejudice to sub-regulation (3), the

Maltese company being divided shall file with the Registrar for

registration

(a)

the draft terms of the cross-border division;

(b)

the declaration of solvency referred to in

regulation 8, if required in terms of these regulations; and

(c)

a copy of the notice informing the members,

creditors and representatives of the employees of the company

being divided, or, where there are no such representatives, the

employees themselves, that they may submit to the company, at

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the latest five (5) working days before the date of the general

meeting, comments concerning the draft terms of the cross-

border division

Provided that the documents specified in this sub-

regulation may be filed with the Registrar for registration

entirely online.

(2)

On being satisfied that the requirements of regulations 6

and 10(1) have been complied with, the Registrar shall register the

draft terms of the cross-border division, the declaration of solvency and

the notice referred to in sub-regulation (1)(c) and shall cause without

delay a statement to be published in the Gazette or on the website

maintained by the Registrar specifying

(a)

the date on which registration was made, together

with an indication that the documents registered relate to the

draft terms of the cross-border division;

(b)

the type, name, registration number and registered

office of the company being divided;

(c)

the legal form and name proposed for each

recipient company and the proposed location of its registered

office in each respective jurisdiction; and

(d)

the information provided by the Maltese company

being divided in terms of sub-regulation (1)(c).

(3)

The requirements of sub-regulation (1) shall not apply

where, for a continuous period beginning at least one (1) month before

the date fixed for the general meeting referred to in regulation 11 and

ending not earlier than the conclusion of that meeting, the Maltese

company being divided makes the documents referred to in sub-

regulation (1) available on its website free of charge to the public.

(4)

Where the Maltese company being divided makes the

draft terms of the cross-border division and, where applicable, the

declaration of solvency, available in accordance with sub-regulation

(3), the company shall submit to the Registrar for registration, the

following information

(a)

the legal form, registration number and name of

the company being divided and the location of its registered

office in Malta;

(b)

the legal form and name proposed for the newly

created companies resulting from the cross-border division and

the proposed location of their registered office;

(c)

an indication of the arrangements made for the

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exercise of the rights of creditors, employees and members; and

(d)

details of the website from which the draft terms

of the cross-border division, the declaration of solvency, the

notice referred to in sub-regulation 1(c), the reasoned opinion

referred to regulation 6(2) and complete information on the

arrangements referred to in paragraph (c) may be obtained

online and free of charge

Provided that the information specified in this

sub-regulation may be submitted to the Registrar for

registration entirely online.

(5)

On being satisfied that the requirements of regulation 6

and sub-regulation (4) have been complied with, the Registrar shall

register the information referred to in sub-regulation (4) and shall

cause without delay a statement to be published in the Gazette or on

the website maintained by the Registrar specifying

(a)

the date on which registration was made, together

with an indication that the information relates to the draft terms

of the cross-border division; and

(b)

the information provided by the Maltese company

being divided in terms of sub-regulation (4).

(6)

In addition to the publications referred to in sub-

regulations (2) and (5), the Registrar shall be required to publish,

without delay, in a daily newspaper circulating wholly or mainly in

Malta, a notice consequent to the registration referred in sub-

regulations (2) and (5), as may be applicable. Such publication shall be

made by the Registrar at the expense of the Maltese company being

divided and the provisions of article 401(1)(e) of the Act shall apply.

(1)

After taking note of the reports referred to in

regulations 7 and 9, where applicable, the employees’ opinions

submitted in accordance with regulation 7(7) and comments submitted

in accordance with regulation 10, the general meeting of the company

being divided shall decide, by means of an extraordinary resolution,

whether to approve the draft terms of the cross‐border division and

whether to amend its memorandum and articles of association.

(2)

The approval by the general meeting referred to in sub-

regulation (1) shall not be valid unless the extraordinary resolution is

approved in accordance with the requirements of the Act and is adopted

at least one (1) month after the publication of the statement referred to

in regulations 10(2) and (5), as may be applicable.

(3)

The general meeting of the company being divided may

reserve the right to make implementation of the cross-border division

conditional on express ratification by the general meeting of the

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arrangements decided on with respect to employee participation in the

company upon completion of the cross-border division.

(1)

When a Maltese company being divided approves

the draft terms of division by extraordinary resolution in accordance

with regulation 11, it shall be required to redeem the shares held by any

dissenting shareholders who so request, for adequate cash

compensation in accordance with the conditions laid down in this

regulation provided that, as a result of the cross‐border division, they

would acquire shares in the recipient companies which would be

governed by the law of a country or jurisdiction other than Malta.

(2)

Any dissenting shareholders wishing to exercise the right

referred to in sub-regulation (1) must declare to the company being

divided their decision to exercise their right to have their shares

redeemed. The declaration must be made in writing and must be

received by the company not later than one (1) month after the general

meeting referred to in regulation 11.

(3)

Without prejudice to sub-regulation (4), upon receipt of

any declarations in accordance with sub-regulation (2), the company

being divided shall redeem the shares held by the dissenting

shareholders and pay the cash compensation specified in the draft terms

of the cross-border division prior to the date when the cross- border

division becomes effective.

(4)

Any dissenting shareholders who have declared their

decision to exercise the right to have their shares redeemed but who

consider that the cash compensation offered by the company being

divided has not been adequately set may, by means of an application

filed in Court not later than one (1) month after the general meeting

referred to in regulation 11, request the company to pay additional cash

compensation. The Court shall decide the application on its merits

within not more than thirty (30) days from the date of service of the

application on the company being divided.

(5)

Any shareholders of the company being divided who did

not have or did not exercise the right to dispose of their shares, but who

consider that the share-exchange ratio set out in the draft terms of the

cross-border division is inadequate, may dispute that ratio and claim a

cash payment. Where no agreement is reached, an application may be

filed in Court by the relevant shareholders not later than one (1) month

after the general meeting referred to in regulation 11, requesting an

additional cash payment from the company being divided and the

Court’s judgement on such matter shall be binding on the recipient

companies and, in the event of a partial division, also on the company

being divided. The Court shall decide the application on its merits

within not more than thirty (30) days from the date of service of the

application on the company being divided. Where an application has

been filed before the Court in terms of this regulation, the Registrar

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may nonetheless issue the pre-division certificate, as long as the

Registrar indicates in the certificate that such an application has been

filed and that the proceedings relating thereto are ongoing.

(6)

Where one (1) or more shareholders of the company

being divided dispute the share-exchange ratio in accordance with sub-

regulation 5, the recipient company concerned and, in the event of a

partial division, also the company being divided, can provide shares or

other compensation instead of a cash payment.

(7)

The substantive merits of any disputes relating to the

shareholders’ rights arising under this regulation 12 shall be decided in

accordance with the laws of Malta and, without prejudice to any valid

and binding arbitration agreement recognised by the laws of Malta,

any such disputes shall be subject to the exclusive jurisdiction of the

Courts in Malta.

The holders of securities, other than shares, in a Maltese

company being divided, to which special rights are attached, shall be

given rights against the Maltese company being divided in accordance

with the draft terms of the cross-border division at least equivalent to

those they possess prior to the division

Provided that any dissenting holders of those securities

shall be entitled to have their securities redeemed by the Maltese

company being divided in accordance with regulation 12.

(1)

The extraordinary resolution approving the cross-

border division shall be delivered for registration to the Registrar

within fourteen (14) days from approval, and the Registrar, being

satisfied that the requirements of regulation 11 have been complied

with, shall register the resolution and shall cause without delay a

statement to be published in the Gazette or on a website maintained by

the Registrar

Provided that in the event of default in complying with

the aforementioned period of fourteen (14) days, every officer of the

company in default shall be liable to an administrative penalty, and for

every day during which the default continues, to a further

administrative penalty.

(2)

The statement referred to in sub-regulation (1) shall

include the following particulars

(a)

the date on which the registration of the

extraordinary resolution was made, together with a reference

that it was passed for the purposes of approving the cross-

border division;

(b)

the type, name, registration number and registered

office of the Maltese company being divided; and

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(c)

the legal form and name proposed for the newly

created companies resulting from the cross-border division and

the proposed location of their registered office.

(1)

A registration made by the Registrar by virtue of

either regulation 10 or 14 may be contested before the Court by any

interested party in accordance with the following conditions

(a)

the contestation shall be made by application

against the Registrar within one (1) month from the publication

following the registration referred to in regulation 10 on the

grounds that the draft terms of the cross-border division were

not drawn up in accordance with the provisions of regulation 6;

or within one (1) month from the last publication following the

registration referred to in regulation 14 on the grounds that the

resolution of the extraordinary general meeting was void or

voidable

Provided that in the latter case, the resolution of the

extraordinary general meeting cannot be challenged solely on the

following grounds

(i)

that the share exchange ratio referred to in

regulation 6(1)(b) has been inadequately set;

(ii)

that the cash compensation referred to in

regulation 6(1)(p) has been inadequately set; or

(iii) that the information given with regard to the

share exchange ratio referred to in paragraph (i) or the

cash compensation referred to in (ii) did not comply with

the legal requirements;

(b)

notice of the application shall be published by the

Registrar in the Gazette or on a website maintained by the

Registrar;

(c)

where it is possible to remedy a defect liable to

render the cross-border division void or voidable, the Court shall

grant the Maltese company being divided a period not exceeding

one (1) month within which to rectify the situation;

(d)

the Court shall decide whether to dismiss or

uphold the application within not more than thirty (30) days

from the filing of the application; and

(e)

a notice that the judgment of the Court has been

delivered shall be published by the Registrar in the Gazette or on

a website maintained by him, which notice shall specify whether

the application has been allowed or dismissed.

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(2)

Without prejudice to sub-regulation (1), any creditor of

the Maltese company being divided whose debt existed prior to the

publication made pursuant to regulation 10 may, within the period of

three (3) months from the said publication, by application, request

adequate safeguards to protect his claims on the ground that the

safeguards offered in the draft terms of the cross-border division, as

provided for in regulation 6(q) are inadequate. If the creditor credibly

demonstrates that, due to the cross-border division, the satisfaction of

his claims is at stake and that he has not obtained adequate safeguards

from the Maltese company being divided, the Court shall uphold the

creditor’s request and order that additional safeguards be provided

subject to the cross-border division becoming effective. The Court

shall decide whether to dismiss or uphold the application within not

more than thirty(30) days from the date of notification of the

application on the Registrar and the company being divided.

(3)

Where a creditor of the company whose debt existed

prior to the publication made pursuant to regulation 10 does not obtain

satisfaction from the company to which the liability is allocated, the

other recipient companies, and in the case of a partial division or a

division by separation, the company being divided, shall be jointly and

severally liable with the company to which the liability is allocated for

that obligation. However, the maximum amount of joint and several

liability of any company involved in the division shall be limited to the

value, at the date on which the division takes effect, of the net assets

allocated to that company.

(1)

Any party who feels aggrieved by the Court’s

judgement relating to an application in terms of regulations 12(4),

12(5), 15(1) or (2) may appeal to the Court of Appeal as constituted in

accordance with article 41(1) of the Code of Organization and Civil

Procedure by means of an application filed in the registry of that court

within thirty (30) days from the date of that judgement and the Court

of Appeal shall set down the cause for hearing at an early date, in no

case later than one(1) month from the date on which the appeal is

brought before it and shall cause notice of such date to be given to the

parties to the suit who, on their part, shall assume the responsibility to

visit the court registry and be aware of the latest information regarding

the appointment for the hearing of the case.

(2)

In the case of an appeal from the Court’s judgment

relating to regulation 15(1), notice of the appeal application shall be

published by the Registrar in the Gazette or on a website maintained

by the Registrar.

(3)

After appointing the application for hearing, and after

listening to the oral submissions made by the parties, the Court of

Appeal shall decide to uphold or reject the appeal, within the shortest

time possible but in any case not later than three (3) months from the

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day when the appeal had been filed and the parties and the Registrar

have been duly notified.

(4)

In the case of an appeal from the Court’s judgement

relating to regulation 15(1), a notice that the judgment of the Court of

Appeal has been delivered shall be published by the Registrar in the

Gazette or on a website maintained by him, which notice shall specify

whether the application has been allowed or dismissed.

(5)

If, during the hearing of the appeal, the Court of Appeal

finds that the application is frivolous and vexatious, the Court of

Appeal may impose on the party an administrative penalty, to be paid to

the counter-party, either between ten thousand (€10,000) and two

hundred and fifty thousand euro (€250,000), or ten (10) per centum (%)

of the annual turnover for the preceding financial year of the company

being divided.

(1)

Upon the lapse of one (1) month from the last

publication following the registration referred to in regulation 14, the

Maltese company being divided shall submit to the Registrar an

application in the prescribed form for registration, to obtain a pre-

division certificate.

(2)

The application referred to in sub-regulation (1) shall be

signed by at least two (2) directors of the Maltese company being

divided, unless the Board of Directors is composed of one (1) director,

and shall be accompanied by the following documents

(a)

the draft terms of the cross-border division;

(b)

the declaration of solvency referred to in

regulation 8, if required in terms of these regulations;

(c)

the directors’ report and the appended opinion, if

any, referred to in regulation 7, where available;

(d)

the independent expert’s report, where required in

terms of these regulations;

(e)

any comments submitted in accordance with

regulation 10(1);

(f)

a copy of the extraordinary resolution referred to in

regulation 11;

(g)

where the Maltese company being divided carries

on in or from Malta any licensable activity, evidence of the

consent of the competent authority in Malta to the cross-border

division;

(h)

where the Maltese company being divided is a

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public company quoted on a recognized investment exchange,

evidence that the said exchange has been notified of the cross-

border division and evidence of the consent of the listing

authority in Malta to the cross-border division; and

(i)

where any shares of the Maltese company being

divided are pledged, the written consent of the pledgee.

(3)

The application referred to in sub-regulation (2) may be

submitted entirely online and signed in counterparts, and such

counterparts together shall constitute one and the same document.

(1)

Upon receipt of the application referred to in

regulation 17 the Registrar shall

(a)

examine all documents and information submitted

to the Registrar in accordance with regulation 17 in order to

confirm the validity of the cross-border division as set out in

this part of the regulations; and

(b)

in respect of compliance with the rules concerning

employee participation, verify that the draft terms of the cross-

border division include information on the procedures by which

the relevant arrangements are determined and on the possible

options for such arrangements.

(2)

The review referred to in this regulation 18 shall be

carried out within three (3) months from the date of receipt by the

Registrar of the documents and information referred to in regulation

17. (3)

Upon completion of the Registrar’s review

(a)

where it is determined that the cross-border

division complies with all the relevant conditions and that all

necessary procedures and formalities have been completed, the

Registrar shall issue the pre-division certificate

Provided that no pre-division certificate shall be

issued prior to the lapse of three (3) months from the

publication referred to in regulation 10

Provided further

(i)

where an application has been made under

regulation 15(1), the Registrar shall only issue such

certificate after the date of the final judgment rejecting

the application;

(ii)

where an application has been made under

regulations 12(4) or 15(2), the Registrar shall only issue

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such certificate after the date of the final judgment

rejecting or upholding the application.

(b) where it is determined that the cross-border

division does not comply with all the relevant conditions or that

not all necessary procedures and formalities have been

completed, the Registrar shall not issue the pre‐division

certificate and shall inform the Maltese company being divided

of the reasons for such decision by not later than seven (7) days

from the lapse of the period referred to in sub-regulation (2). In

that case, the Registrar may give the Maltese company being

divided the opportunity to fulfil the relevant conditions or to

complete the procedures and formalities within an appropriate

period of time.

(4)

The Registrar shall not issue the pre-division certificate

where it is determined that the cross-border division is set up for

abusive or fraudulent purposes leading to or aimed at the evasion or

circumvention of Community or national law, or for criminal purposes.

(5)

Where the Registrar, during the review referred to in sub-

regulation (1), has serious doubts indicating that a cross-border

division is set up for abusive or fraudulent purposes leading to or aimed

at the evasion or circumvention of Community or national law, or for

criminal purposes, the Registrar shall take into consideration relevant

facts and circumstances, of which the Registrar has become aware, in

the course of the review referred to in sub-regulation (1), including

through consultation of relevant authorities.

(6)

Where it is necessary for the purposes of the Registrar’s

assessment under sub-regulations (4) and (5) to take into account

additional information or to perform additional investigative activities,

the period of three (3) months provided for in sub-regulation (2) may

be extended by a maximum of three (3) months.

(7)

Where, due to the complexity of the cross-border

procedure, it is not possible to carry out the assessment within the

deadlines provided for in sub-regulations (2) and (6), the Registrar

shall notify the Maltese company being divided of the reasons for any

delay before the expiry of those deadlines.

(8)

In carrying out the review in terms of this regulation, the

Registrar may

(a)

consult other relevant authorities with competence

in the different fields concerned by the cross-border division,

including those of the country or jurisdiction of the recipient

companies;

(b)

obtain from those authorities and from the Maltese

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company being divided information and documents necessary

to assess the legality of the cross-border division in terms of

these regulations;

(c)

appoint an independent expert to assist with the

Registrar’s assessment

Provided that any independent expert appointed

by the Registrar for such purpose must be independent from the

Maltese company applying for the pre-division certificate and

must have no past or current link with the Maltese company

being divided which might affect the expert’s independence.

A pre-division certificate issued by the Registrar

following the Registrar’s review in accordance with regulation 18,

shall attest to compliance by the Maltese company being divided with

all relevant conditions and to the proper completion of all procedures

and formalities in terms of these regulations.

When the Registrar is notified by the registry in the

country or jurisdiction of each recipient company, that each respective

recipient company has been registered

(a)

the cross-border division shall become effective

upon receipt of all notifications and the Registrar shall proceed

to issue a Certificate of Completion of Cross-Border Division;

(b)

the Registrar shall cause without delay a notice to

be published in the Gazette or on a website maintained by the

Registrar, indicating that the cross-border division has been

completed;

(c)

in the event of a full division, the Registrar shall

(i)

immediately strike the name of the Maltese

company being divided off the register and specify in his

register that the striking off of the Maltese company

being divided is the result of a cross-border division;

(ii)

register the date of striking off of the

company being divided from the register;

and the provisions of article 401(1)(e) of the Act

shall apply; and

(d)

the Registrar shall notify the registers in the

country or jurisdiction of each recipient company that the cross-

border division has taken effect.

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Part II: Procedure and formalities to be applied when Malta is the

jurisdiction of a recipient company

(1)

When a company carrying out a cross-border

division indicates Malta as the jurisdiction of a recipient company, the

Registrar shall review the legality of the cross-border division as regard

that part of the procedure which concerns the completion and approval

of the cross-border division. In particular, the Registrar shall ensure

that the Maltese recipient company complies with the provisions of the

Act on the incorporation and registration of companies and, where

appropriate, that arrangements for employee participation have been

determined.

(2)

For the purposes of sub-regulation (1), the company being

divided shall submit to the Registrar

(a)

the draft terms of the cross-border division

approved by the company’s general meeting;

(b)

the pre-division certificate or a certified true copy

thereof issued by the jurisdiction of the company being divided;

(c)

the memorandum and articles of association of the

recipient company drawn up in accordance with the

requirements of the Act;

(d)

in those cases where the country or jurisdiction of

the company to be divided or of any other recipient company

involved in the cross-border division is not a Member State or

EEA State, a reasoned opinion of one or more practising

advocates confirming that the proposed cross-border division is

permitted by the laws of each such country or jurisdiction; and

(e)

any other documents and information required for

the purposes of recipient company as a Maltese company

Provided that the information and documents

specified in this sub-regulation may be submitted to the

Registrar entirely online.

(3)

The Registrar shall accept the pre-division certificate

referred to in sub-regulation (2)(b) as conclusively attesting to the

proper completion of the applicable pre‐division procedures and

formalities in the departure jurisdiction, without which the cross-border

division cannot be approved.

(1)

Upon determining that all relevant conditions have

been properly fulfilled and formalities properly completed in Malta as

the jurisdiction governing the recipient company, the Registrar shall,

without delay, and in any event, not later than ten (10) working days

from the submission of the documents referred to in regulation 21(2),

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approve the cross-border division and proceed to register the recipient

company as a Maltese company and notify the register in the country

or jurisdiction of the company being divided that the Maltese recipient

company has been registered.

(2)

The certificate of registration of the recipient company

shall include the following

(a)

a statement confirming that the registration of the

recipient company is the result of a cross-border division;

(b)

the date of registration of the recipient company;

and

(c)

the registration number, name and legal form of

the company being divided and of the recipient companies.

Part III – Consequences of a cross-border division

(1)

A cross-border full division shall, as from the date

on which it becomes effective, have the following consequences

(a)

all the assets and liabilities of the company being

divided, including all contracts, credits and rights and

obligations shall be transferred to the recipient companies in

accordance with the allocation specified in the draft terms of

the cross‐border division;

(b)

the members of the company being divided shall

become members of the recipient companies in accordance with

the allocation of shares specified in the draft terms of the cross-

border division, unless they have disposed of their shares as

referred to in regulation 12(1);

(c)

the rights and obligations of the company being

divided arising from contracts of employment or from

employment relationships and existing at the date on which the

cross-border division takes effect shall be transferred to the

recipient companies; and

(d)

the company being divided shall cease to exist.

(2)

A cross-border partial division shall, as from the date on

which it becomes effective, have the following consequences

(a)

part of the assets and liabilities of the company

being divided, including contracts, credits and rights and

obligations shall be transferred to the recipient companies,

while the remaining part shall continue to be that of the

company being divided in accordance with the allocation

specified in the draft terms of the cross-border division;

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(b)

at least some of the members of the company being

divided shall become members of the recipient companies and

at least some of the members shall remain in the company being

divided or shall become members of both in accordance with the

allocation of shares specified in the draft terms of the cross-

border division, unless those members have disposed of their

shares; and

(c)

the rights and obligations of the company being

divided arising from contracts of employment or from

employment relationships and existing at the date on which the

cross-border division takes effect, allocated to the recipient

companies under the draft terms of the cross-border division,

shall be transferred to the respective recipient companies.

(3)

A cross-border division by separation shall, as from the

date on which it becomes effective, have the following consequences

(a)

part of the assets and liabilities of the company

being divided, including contracts, credits and rights and

obligations, shall be transferred to the recipient companies,

while the remaining part shall continue to be that of the

company being divided, in accordance with the allocation

specified in the draft terms of the cross-border division;

(b)

the shares of the recipient companies shall be

allocated to the company being divided;

(c)

the rights and obligations of the company being

divided arising from contracts of employment or from

employment relationships and existing at the date on which the

cross-border division takes effect, allocated to the recipient

companies under the draft terms of the cross-border division,

shall be transferred to the respective recipient company or

companies.

(4)

Without prejudice to regulation 15(3), where an asset or a

liability of the company being divided is not explicitly allocated under

the draft terms of the cross-border division, and where the

interpretation of those terms does not make a decision on its allocation

possible, the asset, the consideration therefore or the liability is

allocated to all the recipient companies or, in the case of a partial

division or a division by separation, to all the recipient companies and

the company being divided in proportion to the share of the net assets

allocated to each of those companies under the draft terms of the cross-

border division.

For the avoidance of doubt the provisions of these

regulations shall be without prejudice to any laws in Malta or in any

other jurisdiction requiring the completion of special formalities before

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the transfer of certain assets, rights and obligations by the company

being divided becomes effective as against third parties and those

formalities shall be carried out by the company being divided or by the

recipient companies, as appropriate.

Upon a cross-border division becoming effective, no

shares in a recipient company shall be exchanged for shares in the

company being divided which are either held by the company itself or

through a person acting in his or her own name but on behalf of the

company.

A cross-border division which has taken effect in

compliance with these regulations may not be declared null and void

Provided that this regulation shall be without prejudice to

powers vested in national authorities, inter alia, in relation to criminal

law, the prevention and combatting of terrorist financing, social law,

taxation and law enforcement and to impose measures and penalties

under national law, after the date on which the cross-border division

took effect.

Part IV – General Provisions

Where a cross-border division is carried out as a division

by separation, paragraphs (b), (c), (f), (i), (o) and (p) of regulation 6(1)

and regulations 7, 9, and 12 shall not apply.

Any director of a Maltese company responsible for wilful

or negligent misconduct in the preparation and the implementation of

the cross-border division, or an expert responsible for drawing up, on

behalf of any Maltese company, of the report on the draft terms of

cross-border division responsible for wilful or negligent misconduct in

the performance of his duties, shall be liable for all damages

occasioned to any shareholder of such company as a consequence of

his misconduct.

These regulations are without prejudice to the application

of Community legislation regulating credit intermediaries and other

financial undertakings and any law in force in Malta made or

introduced pursuant to such community legislation.

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