Oceanrose Investments Ltd, Re:

The case concerned the interpretation and application of the Companies (Cross-Border Mergers) Regulations 2007 which give effect to Directive 2005/56/EC. The principal legal issue was whether Regulation 13 requires a formal meeting of members to approve draft terms of a cross-border merger where the UK transferor company has only a single member who has given written consent. The court held that Regulation 13(1) must be complied with except in the expressly provided exceptions in Regulations 13(3) and 13(4). The court rejected arguments that (a) the concept of "meeting" could not include a meeting attended by a single person in this context; (b) the court had a power under Regulation 11 to dispense with a meeting; (c) the Duomatic principle or the companys articles could override the express statutory requirement; and (d) written resolutions under the Companies Act 2006 provisions applied to these Regulations. The court also held that a creditors' meeting is required only if the court, exercising its discretion under Regulation 11, directs that one be summoned.

Background and parties: The applicant, Oceanrose Investments Limited, a private company incorporated in England, was the UK transferor in a proposed cross-border merger with L.A. Filati SRL, an Italian company. Oceanrose was a single-member company, its sole member being another Italian company, and had no employees and apparently no creditors other than its sole member.

Nature of the application: The application was for the first-stage order in the cross-border merger process. The company applied to a judge (rather than a registrar) seeking a declaration that, because it had a sole member who had given written approval to the merger terms, the statutory requirement to summon a meeting of members under Regulation 11 and to obtain approval under Regulation 13 was unnecessary. A secondary practical ground was urgency connected with Italian tax timing.

Issues framed:

• Whether Regulation 13 requires a meeting of members to be summoned and held even where the company has only one member who has given formal written consent;
• whether the court has a power under Regulation 11 to dispense with a meeting in such circumstances;
• whether the Duomatic principle or the companys articles could operate to substitute a written resolution for a meeting required by the Regulations;
• whether a meeting of creditors is required where the court has not directed one and creditors have consented.

Courts reasoning: The judge analysed the Directive and the Regulations and considered authorities on meetings in analogous contexts (including schemes of arrangement). The court accepted that in some statutory contexts a "meeting" may be convened where a single member or creditor exists, citing authorities to that effect. However, Regulation 13 contains mandatory language requiring approval at a meeting and sets out specific exceptions in Regulations 13(3) and 13(4). The court concluded that Regulation 11s discretion to order a meeting does not include a power to dispense with the statutory approval requirements where those requirements apply; the discretion concerns whether to summon a meeting at all as part of whether to start the process. The Duomatic principle and the companys articles cannot override the express statutory requirements. Provisions of the Companies Act 2006 permitting written resolutions of private companies were not applicable to these Regulations on the facts. The court also held that a creditors' meeting under Regulation 14 is only required if the court exercises its power under Regulation 11 to summon one.

Procedural and wider context: The Regulations envisage an initial application to summon meetings (Regulation 11) and a subsequent certification that pre-merger formalities have been completed (Regulation 6). The practice is that registrar ordinarily deals with the first two applications; the judge heard this application because a point of principle was raised. The court emphasised the need to comply with the document availability and publication timing requirements in Regulations 10 and 12.

The judge refused the company's application to proceed without a meeting of members. The court held that Regulation 13(1) requires approval of the draft terms at a meeting except where Regulations 13(3) or 13(4) apply; the court has no inherent power under Regulation 11 to dispense with that requirement, and neither the Duomatic principle nor the companys articles nor a private company written resolution can override the express statutory requirement. A creditors' meeting is required only if the court directs under Regulation 11.