MDNX Group Holdings Ltd & Ors, Re

At the second stage of a cross-border merger, the court may treat an earlier regulation 6 order as satisfying the jurisdictional requirement in regulation 16(1)(b), even where the earlier order may have been made despite a pre-merger procedural defect. This reflects the conclusive character of the pre-merger certification regime and the need for mutual recognition between national authorities. The position differs where the earlier order expressly certifies that some, but not all, pre-merger acts and formalities were completed. Such an order is not a pre-merger certificate for the purposes of Article 127 or regulation 6, and cannot satisfy regulation 16(1)(b).

The applicants sought approval under regulation 16 of the Companies (Cross-Border Mergers) Regulations 2007 for two linked mergers by absorption within the Interoute group. The transferee company in each merger was English, and the transferor companies included English, Scottish and Dutch companies.

Pre-merger orders had been made for the English companies. The Court of Session made an order for the Scottish company which expressly recorded non-compliance with regulation 12(1) and regulation 12(5)(e), concerning delivery to the Registrar and publication of meeting details in the Gazette. The issue was whether the statutory condition requiring an order under regulation 6 for each UK merging company had been satisfied.

1. The court had jurisdiction to approve Merger 2. The regulation 6 orders made by ICC Judge Barnett for the English companies were orders made under regulation 6 for the purposes of regulation 16(1)(b), notwithstanding the later discovery that regulation 12 had not been strictly complied with.

2. Article 127 of Directive (EU) 2017/1132 requires a pre-merger certificate conclusively attesting to the proper completion of the pre-merger acts and formalities. The court adopted the approach considered in Re M2 Property Invest Ltd [2017] EWHC 3218 (Ch): the second-stage court should generally accept the certificate and should not unravel the first-stage process by conducting a fresh inquiry into the earlier scrutiny. That conclusion was reinforced by the need for mutual recognition between designated national authorities.

3. The court’s conclusion was confined to circumstances involving an honest mistake and no fraud or improper withholding of information. The judge did not decide the separate question of the effect of an immediate appeal against the earlier order.

4. The Court of Session order did not satisfy regulation 16(1)(b). The reference to an order made under regulation 6 means an order certifying that the company had properly completed all the relevant pre-merger acts and formalities. An order certifying that some, but not all, had been completed was not such a certificate. The description of the omissions as exceptions showed that regulation 12 had not been treated as inapplicable.

5. Waltz Properties Ltd v Strelingstav [2010] EWHC 333 (Ch) and Re ABN Amro Commercial Finance plc were concerned with drafting anomalies arising where no members’ meeting was required under regulation 13. They did not establish that a regulation 16(1)(b) jurisdictional requirement was met where an order expressly recorded incomplete compliance with the pre-merger formalities.

6. The court therefore held that it could approve Merger 2, but could not approve Merger 1 because the jurisdictional requirement was unsatisfied in respect of Easynet Managed Services Ltd.

First-instance decision. No appellate history is stated in the judgment.