Increase mergers in the post-Brexit era?

UK Companies may well be absorbed by their EU-based subsidiaries as they restructure in response to the decision to leave the EU.

The High Court has authorised so in a very recent case and the parent company, Formenta Ltd, has now been absorbed by its Italian subsidiary Newco Immobiliare.

The mechanism, in existence since 2007, was designed to avoid the need for company liquidations. The EU Directive on Cross Border Mergers of Limited Liability Companies (2005/56/EC) provides a mechanism whereby qualifying companies can effect mergers by operation of law.

In the UK, this Directive has been implemented by the Companies Cross Border Mergers Regulations 2007 (SI 2007/2974) (as amended) (CCBMR).

The reverse merger may be the first of many!