Merger by Acquisition of Companies in Malta

As in many jurisdictions, Malta’s legislative framework for merger and acquisition activity encompasses laws and regulations that seek to regulate several aspects that may feature in a merger and acquisition transaction, including local and cross-border movements.

Having said this, the Companies Act (Chapter 386 of the Laws of Malta) (the “Act”) is the primary legislation that regulates mergers and acquisitions of private and public companies in Malta. It provides for the amalgamation of companies in the form of a merger by forming a new company and a merger by acquiring a company by another company.

It is important to note that a company may only be amalgamated with another company, meaning that the Act does not allow for the process to happen with another type of commercial partnership. Therefore, it is essential to note from the beginning that some mergers and acquisitions within specific fields require regulatory authorization to conclude the procedure, and this usually takes a significant period which one would need to factor in.

The Process of a Merger by Acquisition

Here we refer to a specific process where a company acquires all the assets, liabilities and obligations of the company (or companies) being acquired. Furthermore, the company’s shareholders will become shareholders of the new company, and ultimately, the company that is being acquired is then placed into dissolution.

The acquired company may be dissolved without having to be wound up as per the provisions of the Act, and the dissolution will occur as soon as the amalgamation becomes effective. The Registrar will issue a new certificate of registration reflecting the recent merger for the acquiring company. Before the Registrar strikes off the acquired companies, several requirements must be satisfied and discussed.

Generally, a merger and acquisition for a private company takes less time to conclude. This process will take place through a transfer of shares by private agreement.

Acquisition of a publicly listed company generally occurs through a takeover offer or a takeover bid that may be mandatory or voluntary. These bids are public offers made to the shareholders of a public listed company to acquire all or some of its securities to achieve the acquisition of control of that company. All types of acquisitions under Maltese law, the EU regulations and directives are heavily regulated. The laws and rules are in place to protect the company and the shareholders, including the minority shareholders of such companies, throughout the acquisition process.

The Listing Rules in Malta clearly outline the steps that must occur within specific timeframes and be respected. For example, after the bid’s announcement, the bidder has twenty-one days to make his offer document public. The offer document must present a certain level of information disclosed publicly and includes an independent expert report on the consideration offered.

SICAVs are governed by the Companies Act (SICAV Incorporated Cell Companies) Regulations (SL 386.14 of the Laws of Malta), and thus such legislation is to be taken into account when a merger and acquisition in this regard is taking place. The Investment Services Act (UCITS Mergers) Regulations (SL 370.19 of the Laws of Malta) regulate mergers for UCITS (Undertakings for Collective Investment in Transferable Securities) specifically. Similarly, specific fields, such as gaming or financial services, require regulatory clearance from their relevant regulatory or licensing authority, and this is also an important point to consider when contemplating a merger and acquisition.

General Requirements

The directors of each respective company must draw up the “Draft Terms of Merger”, which document shall specify, among other things, the status of the company, the name and registered office address of the companies to be merged, as well as the terms relating to the allotment of shares in the acquiring company.

The final merger draft terms are then signed by at least one director and company secretary of each amalgamating company and subsequently filed with the Malta Business Registry. The Registrar will review and approve the documents provided all the requirements are satisfied.

An extraordinary resolution of each of the concerned companies must be drawn up and approved. This resolution must be agreed upon at least one month after and not later than three months from the publication of the Draft Terms of the Merger. The directors must address the general meeting of their company and inform the directors of the other amalgamating companies accordingly so that, in turn, they may address their respective company general meetings duly of any material changes.

The above shall not apply if all the shareholders of all the companies involved in the amalgamation have agreed.

A written report to the shareholders is to be drawn up by one or more experts (which shall be approved by the Registrar) acting on behalf of each amalgamating company. The report shall specify whether the share exchange ratio is fair and reasonable, and to this effect, it shall:

  1. Indicate the method or methods used to arrive at the share exchange ratio proposed; and
  2. State, whether such method or methods are adequate in the case in question, indicating the values arrived at using each method and giving an opinion on the relative importance attributed to such method or the methods used to arrive at the value decided on.

The report shall describe any particular valuation difficulties which have arisen, and each expert shall be entitled to obtain from the amalgamating companies all relevant information and documents and to carry out all necessary investigations.

The directors will appoint one or more independent experts to draw up a joint report for all the amalgamating companies by the Registrar at the joint request of the companies involved. The above shall not apply if all the shareholders of all the companies involved in the amalgamation have agreed.

The shareholders of the amalgamating companies are entitled to inspect the following documents at the registered office of each company at least one month before the date fixed for the general meeting, which is to decide on the Draft Terms of Merger:

  1. the Draft Terms of Merger;
  2. the annual accounts and the directors’ reports of the amalgamating companies for the preceding three accounting periods;
  3. where required, an accounting statement drawn up as at a date which shall not be earlier than the first day of the third month preceding the date of the draft terms of the merger if the latest annual accounts relate to an accounting period which ended more than six months before that date;
  4. where required, the reports of the directors of the amalgamating companies relating to the amalgamation;
  5. where required, the reports of the experts relating to the amalgamation; and
  6. for paragraph (c), an accounting statement is not required if the company publishes a half-yearly financial report in accordance with listing rules issued in terms of the Financial Markets Act and governing such reports and makes it available to shareholders in accordance with this sub-article. Furthermore, an accounting statement shall not be required if all the shareholders and all holders of other securities conferring the right to vote for each of the companies involved in the merger have so agreed.

Notwithstanding the above, any interim depreciation, provisions and material changes in actual values not shown in the companies’ accounting records are considered.


The consolidation process of the companies comes into effect three months from the date of the last statement published in the Gazette or the website maintained by the Registrar.

During this time, any creditor of any of the respective companies whose debt existed before the Draft Terms of Merger was officially published may object to the amalgamation by sworn application, giving clear reasons why it should not take effect.

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