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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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.