Gibraltar: What Impact Will Brexit Have On Gibraltar Cross-Border Mergers?

Last Updated: 15 November 2017
Article by Christian Caetano

The EU wide cross-border merger framework

Cross-border mergers involving Gibraltar companies are governed by the Companies (Cross-Border Mergers) Regulations 2010 (the "Regulations"). The Regulations give effect to European Commission Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies (the "Directive").

The cross-border merger regime establishes a harmonised mechanism for qualifying legal entities established in EEA member states to effect transfers of assets and liabilities. From a Gibraltar perspective, the Regulations permit eligible entities from EEA member states to merge with Gibraltar limited liability companies (other than companies limited by guarantee or companies subject to winding up proceedings), as well as for multiple EEA companies to merge into one newly formed Gibraltar company. The reverse is also possible since Gibraltar companies are permitted to merge with entities in other EEA member states.

In terms of mechanics, there are three possible general types of merger under the Regulations:

  1. Merger by absorption - where one or more transferor companies transfer all their assets and liabilities to an existing transferee company;
  1. Merger by absorption of a wholly owned subsidiary - where a wholly owned subsidiary transfers all of its assets and liabilities to its parent company (the most common form of merger); and
  1. Merger by formation of a new company – where two or more transferor companies transfer all of their assets and liabilities to a newly formed company.

Key benefits

One of the main advantages of such mergers is that they provide for the automatic transfer of assets and liabilities by operation of law. In Gibraltar for instance, mergers under the Regulations are sanctioned by way of an order from the Supreme Court. Cross-border mergers also enable for the automatic dissolution of transferor companies without the need for a formal liquidation, saving both time and costs. Furthermore, a merger approved by the relevant competent authority of one EEA state has full effect in other EEA states (subject to any filing requirements/special formalities required by applicable law) and accordingly provides valuable legal certainty.

Under the right conditions therefore, a cross-border merger has significant advantages over a traditional asset purchase and subsequent liquidation. The procedure is just as effective whether used to effect intra-group reorganisations by large multinationals or for straightforward vertical parent/subsidiary absorptions. The ultimate result is the consolidation of assets, capital and resources within one single entity.

Brexit impact

It is therefore unfortunate that, despite its popularity as a restructuring tool, its relevance for companies in Gibraltar (and the UK) in a post-Brexit world is under threat. As explained above, the Regulations derive from EU law. Therefore, if the UK, and consequently Gibraltar, ceases to form part of the EEA, then references to 'EEA states' under the laws of other EEA states would, by definition, automatically cease to include/mean a reference to Gibraltar. In such a scenario, cross-border mergers with Gibraltar entities would no longer be possible under the framework established by Directive.

One possibility to counteract the above would be for Gibraltar to introduce or amend legislation to allow for its companies to merge with EEA companies. Other EEA States would however need to reciprocate by amending their own legislation on an analogous basis, which could prove difficult. Nevertheless, there are already some countries which allow for mergers with non-EEA countries, meaning that there are precedents. It should also be noted that cross-border mergers are not currently possible between the United Kingdom and Gibraltar due to peculiarities in the latter's particular form of EEA membership. However, this anomaly should be up for review as a consequence of Brexit and the revised arrangements which will be entered into between the territories.

As reported recently, the time currently set for the UK's withdrawal from the EU is Friday the 29th of March 2019 at 11pm, although it is to be seen whether this will be extended, subjected to a transitional deal, or even reversed (albeit unlikely). In a worst case scenario however, any entities within the EU seeking to avail themselves of the merger procedure in order to relocate to Gibraltar will only have some fifteen months or so in which to do so.

Relocation to Gibraltar

As Gibraltar moves ahead with a number of new business initiatives, most notably the upcoming introduction of its regulatory framework for Distributed Ledger Technology (DLT), interest in the jurisdiction continues to grow at remarkable levels. This was recently confirmed by Gibraltar's Minister for Commerce, Albert Isola, who reportedly cited the level of interest in the territory as "absolutely staggering". Gibraltar also continues to attract new gaming, financial services and fintech firms to the Rock thanks to its robust regulatory environment, business friendly reputation and low cost base.

In the insurance sector specifically, a number of insurers based in other EU countries have already signalled an intention to re-domicile their operations to Gibraltar, driven primarily by a requirement to access the UK's financial market post-Brexit (an access which Gibraltar has been assured it will continue to benefit from pursuant to bilateral arrangements with the UK). It should be noted that the relocation of an insurance company is best achieved via a redomiciliation, rather than by way of a cross-border merger, due to regulatory implications arising from a transfer of policies, and this topic will be covered in a future article.

In light of the above, any EU business considering relocating to Gibraltar in the near future should contemplate whether the cross-border merger mechanism will enable them to achieve this in a cost effective and efficient manner. From a practical perspective, the Gibraltar aspects of a cross-border merger can be completed in as little as three to six months, meaning that any such mergers should be commenced in the next six to nine months to ensure that any potential Brexit implications (if any) are avoided.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions