Nielsen Holdings Plc, Re

Under regulation 16 of the Companies (Cross-Border Mergers) Regulations 2007, satisfaction of the formal conditions does not require approval. The court retains an unfettered discretion. It may approve a merger subject to conditions governing when it takes effect. Such conditions should ordinarily ensure that the transaction implemented is the transaction approved by shareholders and intended by them. The court must have sound grounds for expecting compliance, identify no known obstacle to completion, and ensure that the conditions do not give a third party a free-standing choice whether to implement the merger. Conditions requiring regulatory approval or confirmatory professional opinions may be acceptable.

Nielsen NV, a Dutch company, and its wholly-owned UK subsidiary, Nielsen Holdings Limited, applied for approval of a cross-border merger by absorption. Holdings was to acquire NV, enabling NV to change its domicile to the United Kingdom and facilitating the intended New York Stock Exchange listing of Holdings’ shares.

The statutory jurisdiction arose under regulation 16 of the Companies (Cross-Border Mergers) Regulations 2007. The six formal statutory preconditions were satisfied. The issue was whether the court should exercise its discretion to approve the merger despite four outstanding contractual conditions, concerning share eligibility for depositary, book-entry and clearance services and professional opinions on tax matters.

1. Approval jurisdiction. The six formal preconditions in regulation 16 of the Companies (Cross-Border Mergers) Regulations 2007 were satisfied, but approval remained discretionary.
2. Applicable guidance. The discretion was unfettered. The court could impose conditions concerning the date on which the merger would take effect. The nature of those conditions was relevant, together with conventional considerations such as creditor and employee protection.
3. The court would normally require conditions to ensure that the effective transaction was the transaction previously approved by shareholders and intended by them. It should not make a futile order. It therefore required sound grounds for believing that the conditions would be met, no known obstacle to completion, and a scheme addressing the possibility of non-satisfaction.
4. Conditions could not confer on a third party a separate decision whether to implement the transaction. Regulatory approval could nevertheless be an acceptable condition where it involved determining whether regulatory requirements were met, rather than exercising a free-standing implementation choice. The court also found helpful the principle that a scheme should be self-executing, so that defined results followed from defined events.
5. The condition requiring the Holdings shares to be deemed eligible for deposit, book-entry and clearance services was an appropriate outstanding condition. The scheme provided that the merger would not proceed if it was not satisfied by the long-stop date.
6. The conditions requiring professional opinions on the continuing accuracy of the stated tax considerations were confirmatory, related to matters disclosed to shareholders, and intended to establish that the proposal remained as represented when effective.
7. The merger was approved notwithstanding the outstanding conditions. They were appropriate and likely to be fulfilled; if they were not, the merger would not proceed.

First-instance application for approval of a cross-border merger. No prior appellate decision was stated.