By means of Subsidiary Legislation 386.27, the Government of Malta has published the above-mentioned rules, the scope of which is to transpose into Maltese legislation the European Union Directive 2019/2121/EU amending the EU Directive 2017/1132 as regards cross border conversions, mergers and divisions. This EU directive, also referred to as ‘The Mobility Directive’ is part of the major efforts being undertaken by the EU in order to enhance cross-border mobility and freedom of establishment with a view to sustain the development of the Single Market.
In this article, we shall be describing the duty of the board of directors of a Maltese limited liability company in Malta (hereinafter referred to as ‘the converting company’) which resolves to be converted into a company which is formed and registered in another EU member state to engage the services of an independent expert to draft an expert’s report in accordance with Regulation 9 of the Regulations.
An expert acting on behalf of the Maltese registered converting company but independent of it and approved by the Registrar, shall examine the draft terms of a cross-border conversion and draw up a 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 approving the draft terms of the cross-border conversion.
The said report shall include the expert’s opinion as to whether the cash compensation to be given to dissenting members to is adequate. When assessing the cash compensation, the expert shall consider any market price of the shares in the company prior to the announcement of the conversion proposal or the value of the company excluding the effect of the proposed conversion, as determined in accordance with generally accepted valuation methods.
The report shall at least:
- Indicate the methods used to determine the cash compensation proposed
- state whether the methods used are adequate for the assessment of the cash compensation, 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 describe any special valuation difficulties which have arisen
The expert shall be entitled to obtain from the company all information necessary for the discharge of his duties.
The examination of the draft terms of a cross[1]border conversion by an independent expert and the preparation of an independent expert report shall not be required if all the members of the company have so agreed or if the company being converted is a single-member company.
In terms of the above, and provided that all formalities in terms of the Regulations as well as under the Laws of the destination jurisdiction are satisfied, the Company shall, by virtue of the Cross-border Conversion, be converted into the Converted Company without being dissolved, wound up or going into liquidation and shall, with effect from the effective date of the Cross-border conversion, be struck off the company register in Malta in accordance with the provisions of regulation 20 of the Regulations.
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