Draft terms of division.
Amended by: IV. 2003.135.
361. (1) The directors of the company to be divided and of each of the recipient companies (hereinafter referred to in this Part as "the companies involved in a division") shall draw up draft terms of division in writing.
(2) The draft terms of division shall specify the following: (a) the status, name and registered office of each of the
companies involved in the division;
(b) the share exchange ratio and the amount of any cash payment;
(c) the terms relating to the allotment of shares in each of the recipient companies;
(d) the date from which the holding of such shares entitles the holders to participate in profits and any special conditions affecting that entitlement;
(e) the date from which the transactions of the company to be divided shall be treated for accounting purposes as being those of one or other of the recipient companies; (f) the rights conferred by each of the recipient companies on the holders of shares to which special rights are attached and the holders of securities other than shares, or the measures proposed concerning them; (g) any special advantage granted to the experts referred
to in article 364 and to the directors of each of the companies involved in the division;
(h) the precise and detailed description and allocation of the assets, rights, liabilities and obligations to be delivered to each of the recipient companies; and (i) the allocation to the shareholders of the company to be
divided of shares in the recipient companies and the criterion upon which such allocation is based.
(3) Where an asset is not allocated by the draft terms of division and where the interpretation of these terms does not make a decision on its allocation possible, the asset or the consideration th erefor shall be allocated to all the recipient companies in proportion to the share of the net assets allocated to each of those companies under the draft terms of the division.
(4) Where a liability is not allocated by the draft terms of division and where the interpretation of these terms does not make
a d e c i s i o n o n i t s a l l o c a t i o n p o s s i b l e , e a c h o f t h e r e c i p i e n t companies shall be jointly and severally liable for it:
Provided that such joint and several liability shall be limited to the net assets allocated to each company.
(5) The draft terms of division for each of the companies involved in a division duly completed, shall be signed by at least one director and the company secretary of each of the companies involved in the division, and forwarded to the Registrar by each company for registration, who being satisfied that the requirements of the provisions of this article have been complied with, shall register them. Approval by extraordinary resolution of division. Amended by: IV. 2003.136.
362. (1) A division may only be made if it has been approved by an extraordinary resolution of each company involved in the division to be adopted by each such company at least one month after the publication of its draft terms of division and not later than three months therefrom.
(2) Where shares in the recipient companies are allocated to the shareholders of the company to be divided otherwise than in proportion to their rights in the capital of that company, the dissenting members of that company may exercise the right to have their shares redeemed. In such case, the shares shall be redeemed on such terms as may be agreed or as the court, on a demand made either by any of the recipient companies or by any of the dissenting members of the company to be divided, thinks fit to order.
(3) The provisions of this Act governing alterations and additions to the memorandum and articles shall, as appropriate, apply to any alterations and additions to the memorandum and articles necessitated by any division referred to in this Part.
(4) Where there is more than one class of shares in any of the companies involved in a division the extraordinary resolutions of those companies concerning the division shall be subject to a separate vote by at least each class of shareholders whose rights are affected thereby.
(5) The extraordinary resolution taken by each of the
companies involved in a division shall cover both the approval of the draft terms of division and any alterations and additions to the memorandum and articles necessitated by the division.
(6) The general meeting of any recipient company shall not be required if the following conditions are fulfilled:
(a) the publication of the statement referred to in article 401(1)(e), provided for pursuant to the registration required by virtue of article 361(5) shall be effected, for each recipient company, at least one month and not more than three months before the date fixed for the general meeting of the company to be divided which is to decide on the draft terms of division;
(b) at least one month before the date specified in paragraph (a) all shareholders of each recipient company shall be entitled to inspect the documents
specified in article 365(1) at the registered office of that company; and
(c) one or more shareholders of any recipient company holding at least five per cent of the issued share capital which carries a right to vote at general meetings of the company shall be entitled to require that a general meeting of that recipient company be called to decide whether to approve the division.
Drawing up of detailed written report on draft terms of division by directors. Amended by: IV. 2003.137.
363. (1) The directors of each of the companies involved in a division shall draw up a detailed written report explaining the draft terms of division and setting out the legal and economic grounds for them, in particular the share exchange ratio and the criterion determining the allocation of shares. The report shall also describe any special valuation difficulties which have arisen.
(2) The report shall refer to any report prepared pursuant to article 73(4).
(3) The directors of a company to be divided shall inform the general meeting of that company of any material change in the assets and liabilities between the date of preparation of the draft terms of divisio n and th e date of the general meeting of th e company to be divided which is to be convened to decide on the draft terms of division.
(4) The directors of a company to be divided shall furthermore inform the directors of the recipient companies so that these dire ctors ca n inform the respective general meetings of any m a t e r i a l c h a n g e i n t h e a s s e ts a n d l i a b il i t i e s a s s p e c i f i e d in subarticle (3). Written report to shareholders to be drawn up by one or more experts. 364. (1) One or more experts acting on behalf of each of the
companies involved in a division but independent of them and approved by the Registrar, shall examine the draft terms of division and draw up a written report to the shareholders.
(2) The provisions of article 348(2) to (5) shall apply to the report.
(3) The report on considerations other than in cash referred to in article 73(4) and the report on the draft terms of division drawn up in accordance with subarticle (1) shall be drawn up by the expert or experts approved under subarticle (1).
Documents which shareholders of companies involved in a division are entitled to inspect. 365. (1) All shareholders of the companies involved in a
division shall be entitled to inspect the following documents at the registered office of each company involved in the division at least one month before the date of the general meeting which is to decide on the draft terms of division:
(a) the draft terms of division;
(b) the annual accounts and directors’ reports of the companies involved in the division for the preceding three accounting periods;
shall not be earlier than the first day of the third month preceding the date of the draft terms of division, if the latest annual accounts relate to an accounting period which ended more than six months before that date; (d) the reports of the directors of the companies involved
in the division provided for in article 363(1); and (e) the reports provided for in article 364.
(2) The accounting statement provided for in subarticle (1)(c) shall be drawn up using the same methods and the same layout as the latest balance sheet:
Provided that -
(a) it shall not be necessary to take a fresh physical inventory;
(b) the valuations shown in the latest balance sheet shall be altered only to reflect entries in the accounting records; and
(c) the following shall nevertheless be taken into account: interim depreciation and provisions, and material changes in actual values not shown in the accounting records.
(3) Every shareholder shall be entitled to obtain, on request and free of charge, full or, if so desired, partial copies of the documents referred to in subarticle (1). Non-applicability of certain provisions where shareholders involved in a division are in agreement.
366. The provisions of article 363, article 364(1) and (2) and article 365(1)(c), (d)and(e) shall not apply if all the shareholders of all the companies involved in a division have so agreed.
Delivery of extraordinary resolutions relating to division to Registrar for registration.
367. The extraordinary resolution approving the division p a s se d b y t h e c o m p a n y t o b e d i v i d e d a n d t h e e x t ra o r d i n a ry resolutions passed by the recipient companies together with the instruments giving effect to the division, or an authentic copy thereof, shall be delivered for registration to the Registrar who, being satisfied that the requirements of the preceding provisions of this Part have been complied with, shall register them.
Rights of creditors to oppose division.
Amended by: IV. 2003.138.
368. (1) The division shall not take effect until three months from the date of the publication of the statement referred to in article 401(1)(e) relating to the extraordinary resolutions approving the division.
(2) During the aforesaid period of three months any creditor of any of the companies involved in a division whose debt existed prior to the publication of the statement referred to in article 401(1)(e), provided for pursuant to the registration required by virtue of article 361(5) may, by writ of summons, object to the division, and if he shows good cause why it should not take effect, the court shall either uphold the objection or allow the division on sufficient security being given.
(3) In so far as a creditor of a company to which the obligation or liability has been allocated in accordance with the draft terms of division has not obtained satisfaction, the recipient companies shall be jointly and severally liable for that obligation:
Provided that as regards the recipient companies other than the one to which the obligation or liability has been allocated, this liability shall be limited to the net assets allocated to each of those companies:
Provided further that this subarticle shall not apply where the operation involving the division is subject to the supervision of the court in accordance with article 375 and a majority in number representing three-fourths in value of the creditors of the company to be divided have agreed to forego such joint and several liability at a meeting held pursuant to article 375(2)(c).
(4) The provisions of subarticles (1), (2) and (3) shall apply to the debenture holders of the companies involved in a division so long as the division has not already been approved by the debenture holders, individually or by a special meeting of the debenture holders called specifically for the purpose, at which meeting all the debenture holders shall signify their consent.
Protection of holders of securities in a division. 369. The holders of securities, other than shares, to which
special rights are attached, shall be given rights in the recipient companies agains t which such securities may be invoked in accordance with the draft terms of division, at least equivalent to the rights they possessed in the company to be divided, unless -
(a) the holders of those securities individually agree to the alteration of their rights; or
(b) the alteration has been approved by a meeting of the holders of those securities called specifically for the purpose at which meeting all the holders of such securities shall signify their consent; or
(c) the holders of these securities are entitled to have their securities repurchased. Duties of Registrar in respect of a division. Amended by: IV. 2003.139.
370. (1) Upon the division becoming effective either through the lapse of the period referred to in article 368 or, where objection is made under that article, by a decision of the court, the Registrar shall strike the name of the company to be divided off the register a n d i s s u e a c e r t i f i c a t e o f r e g i s t r a t i o n , a l t e r e d t o m e e t t h e circumstances of the case and denoting the fact of the division, for all the recipient companies, and where a division which has been registered under this Part does not become effective pursuant to a decision of the court under article 368, the Registrar shall amend the registration accordingly.
(2) The Registrar shall, in respect of every company involved in a division, either proceed to publish a notice of the division after it has become effective or to publish a notice that the division has not become effective pursuant to a decision of the court under a r t i c l e 3 6 8 i n b o t h c a s e s a s s p e c i f i e d i n s u b a r t i c l e ( 1 ) . T h e publication shall be made in accordance with the provisions of
article 401(1)(e). Consequences of division. Amended by: IV. 2003.140; II. 2004.61.
371. (1) A division shall have the following consequences: (a) the recipient companies shall succeed to all the assets,
rights, liabilities and obligations of the company to be divided, both as between the company to be divided and the recipient companies and as regards third parties without the requirement of any formalities other than those arising under this Part;
(b) the shareholders of the company to be divided shall become shareholders of one or more of the recipient companies; and
(c) the company to be divided shall cease to exist.
(2) No shares in a recipient company shall be exchanged for shares held in the company to be divided either -
(a) by that recipient company; or (b) by the company to be divided.
(3) The division shall not prejudice the rights enjoyed by the creditors of the company to be divided over any of the assets of that company.
(4) Where the assets of the company to be divided include immovable property or rights relating thereto, the directors of the recipient companies shall cause within one month from the coming into force of the division, a declaratory public deed to be published, c o n t a i n i n g a d e t a i l e d d e s c r i p t i o n a n d t h e a l l o c a t i o n o f t h e immovable property or rights relating thereto delivered to each of the recipient companies, and a true copy of the said deed shall be lodged with the Registrar within fourteen days from the enrolment thereof at the Public Registry.
Liability of director or expert for wilful or negligent misconduct. Amended by: IV. 2003.141.
372. Any person who -
(a) being a director of a company to be divided and who is responsible for the preparation and the implementation of the division, or
(b) being an expert who is responsible for drawing up on behalf of the said company the report on the draft terms of the division,
and who, as a consequence of his wilful or negligent misconduct in the performance of his duties causes damages to any shareholder of the company to be divided, shall be liable for such damages.
Appeal from decisions of Registrar.
Amended by: IV. 2003.142.
373. Any interested party may contest the registration made by the Registrar, by virtue either of article 361 or of article 367 before the court in accordance with the following conditions:
(a) the contestation shall be made by application against the Registrar within one month from the publication following the registration referred to in article 361 on the grounds that the draft terms of division were not drawn up in accordance with the provisions of article
361, or within three months from the publication following the registration referred to in article 367 on the grounds that any of the resolutions of the extraordinary general meetings mentioned therein was void or voidable; notice of the application shall be published by the Registrar;
(b) where it is possible to remedy a defect liable to render a division void or voidable, the court shall grant the companies involved a period within which to rectify the situation;
(c) a notice that the judgment of the court has been delivered shall be published by the Registrar, which notice shall specify whether the application has been allowed or dismissed;
(d) a judgment declaring a division void or voidable shall not of itself affect the validity of obligations owed by or in relation to the recipient companies which arose before the judgment was delivered and after the date of registration of the draft terms of division referred to in article 361 or of the resolutions and the other instruments referred to in article 367 according to the case;
(e) each of the recipient companies shall be liable for its obligations arising after the date on which the division took effect and before the date on which the judgment declaring the division void was delivered;