s.233Merger and consolidation
233
Section 233Part 16 — Merger, Consolidation and ConversionNot Yet In Force

Merger and consolidation

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This section has not been brought into force.

It was enacted by Parliament but awaits a commencement order before it becomes operative law.

Amendment: LG13/S2

Pending changes

Adds new section for conversion of a limited liability company to an exempted company.

Adds new section for conversion of a foundation company to an exempted company.

Without prejudice to section s 86 an d 87 , bu t subject to section 239 A , two or more companies limited by shares and incorporated under this Act , m ay, subject to any express provisions to the contrary in the memorandum and articles of association of any of such companies, merge or consolidate in accordance with subsections (3) to (15).
Nothing in this Part shall derogate from the Authority ’ s powe rs in relation to any constituent company that is a licensee under the regulatory laws and that proposes to participate in a merger or consolidation, or from a constituent company ’ s obligations under the regulatory laws.
The directors of each constitue nt company that proposes to participate in a merger or consolidation shall on behalf of the constituent company of which they are directors approve a written plan of merger or consolidation.
The plan referred to in subsection (3) shall give particulars of the following matters —
the name of each constituent company and the name of the surviving or consolidated company;
the registered office of each constituent company;
in respect of each constituent company, the designation and number of eac h class of shares;
the date on which it is intended that the merger or consolidation is to take effect, if it is intended to take effect in accordance with section 234 , and not in accordance with subsection (13);
the terms and conditions of the proposed merger or consolidation, including where applicable, the manner and basis of converting shares in each constituent company into shares in the consolidated or surviving company or into other property as provided in subsection
; ( f ) the rights and restrictions attaching to the shares in the consolidated or surviving company; ( g ) in respect of a merger, any proposed amendments to the memorandum of association and articles of association of the surviving company, or if none are proposed, a statement that the memorandum of association and articles of association of the surviving company immediately prior to me rger shall be its memorandum of association and articles of association after the merger; ( h ) in respect of a consolidation, the proposed new memorandum of association and articles of association of the consolidated company; ( i ) any amount or benefit paid or payable to any director of a constituent company, a consolidated company or a surviving company consequent upon the merger or consolidation; ( j ) the name and address of any secured creditor of a constituent company and of the nature of the secured inter est held; and ( k ) the names and addresses of the directors of the surviving or consolidated company. ( 5 ) Some or all of the shares whether of different classes or of the same class in each constituent company may be converted into or exchanged for differen t types of property (consisting of shares, debt obligations or other securities in the surviving company or consolidated company or any other corporate entity, or money or other property, or a combination thereof) as provided in the plan of merger or conso lidation.
A plan of merger or consolidation shall be authorised by each constituent company by way of —
a special resolution of the members of each such constituent company; and
such other authorisation, if any, as may be specified in such constituent company ’ s articles of association.
Notwithstanding subsection (6)(a), if a parent company incorporated under this Act is seeking to merge with one or more of its subsidiary companies incorporated under this Act , a special resolution under t hat subsection of the members of such constituent companies is not required if a copy of the plan of merger is given to every member of each subsidiary company to be merged unless that member agrees otherwise.
The consent of each holder of a fixed or f loating security interest of a constituent company in a proposed merger or consolidation shall be obtained but if such secured creditor does not grant that person’s consent then the Court may upon application of the constituent company that has issued the security waive the requirement for such consent upon such terms as to security to be issued by the consolidated or surviving company or otherwise as the Court considers reasonable.
After obtaining any authorisations and consents under subsections (6) a nd (8), the plan of merger or consolidation shall be signed by a director on behalf of each constituent company and filed with the Registrar together with, in relation to each constituent company —
a certificate of good standing;
a director ’ s decla ration that the constituent company is, and the consolidated or surviving company will be, immediately after merger or consolidation, able to pay its debts as they fall due;
a director ’ s declaration that the merger or consolidation is bona fide and not intended to defraud unsecured creditors of the constituent companies;
a director ’ s declaration that —
no petition or other similar proceeding has been filed and remains outstanding, and that no order has been made or resolution adopted to wind up the company in any jurisdiction;
no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the constituent company, its affairs, or its property or any part thereof; and
no sch eme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the constituent company are, and continue to be, suspended or restricted;
a director ’ s declaration of the assets and liabilities of the constituent company made up to the latest practicable date before the making of the declaration;
in the case of a constituent company that is not a surviving company, a director ’ s declaration that the constituent company has reti red from any fiduciary office held or will do so immediately prior to merger or consolidation;
an undertaking that a copy of the certificate of merger or consolidation under subsection (11) will be given to the members and creditors of the constituent company and that notification of the merger or consolidation will be published in the Gazette; and
a director ’ s declaration, where relevant, that the constituent company has complied with any applicable requirements under the regulatory laws.
A di rector ’ s declaration under subsection (9) shall be in writing, signed by, and shall include the full name and address of, the director making the declaration.
Upon payment of the applicable fees under this Act and upon the Registrar being satisfied th at the requirements of subsection (9) in respect of the merger or consolidation have been complied with and that the name of the consolidated company complies with section 30 , the Registrar shall register the plan of merger or consolidation including any new or amended memorandum and articles of association and issue a certificate of merger or consolidat ion under that person’s hand and seal of office, and in the case of a consolidation section 27 shall apply in relation to the consolidated company.
A certificate of merger or consolidation issued by the Registrar shall be prima facie evidence of compliance with all requirements of this Act in respect of the merger or consolidation.
Subject to s ectio n 234 , a merger or consolidation shall be effective on the date the plan of merger or consolidation is registered by the Registrar.
A person who, being a director, makes a false declaration under subsection (9) commits an offence and is liable on summary conviction to a fine of twenty thousand dollars or to imprisonment for five years, or both.
In any proceedings for an offence under subsection (14) it shall be a defence for the person charged to prove that that person took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by that person or any pe rson under that person’s control.
Any director ’ s declaration pursuant to this section may be given in the form of a declaration or an affidavit, as the director may determine. 233A. Conversion of a limited liability company to an exempted company 2 33A .( 1 ) Subject to this section, a limited liability company (the “ conversion applicant ”) may be re - registered as an exempted company if —
the conversion applicant —
resolves to be so re - registered upon the affirmative vote or written consent of at least two - thirds of the members of the conversion applicant; or
is expressly permitted in the conversion applicant’s LLC agreement to provide an alternative vote, wri tten consent or any other form of authorisation for the conversion (the “ conversion consent ”) as may be provided for in the agreement; and
the conversion applicant applies to the Registrar for re - registration and submits the documents under subsection (3). (2) The conversion consent under subsection (1)(a) shall adopt — (a) a registration declaration for the conversion applicant as an exempted company; and (b) memorandum and articles of association in conformity with the requirements of this Act to take effect upon re - registration of the conversion applicant. (3) The application shall be signed by a manager or authorised person of the conversion applicant and accompanied by a copy of the registration declaration under subsection (2)(a) and a ce rtificate of good standing for the conversion applicant. (4) The conversion applicant shall submit with an application under subsection (1)(b) a re - registration fee equal to the annual fee payable by an exempted company pursuant to section 169(1). (5) If, on an application under this section, the Registrar is satisfied that a conversion applicant may be re - registered under this section as an exempted company, the Registrar shall — (a) retain (in a form that the Registrar may determine) the application and other documents delivered to the Registrar under this section; (b) issue to the conversion applicant a certificate of re - registration stating that the conversion applicant has been re - registered as an exempted company; and
enter details in the Register in respect of the exempted company’s re - registration as the Registrar considers appropriate. (6) Subject to subsection (7), upon the issue of a certificate of re - registration to an exempted company under subsection (5)(b) — (a) the conversion applicant, by virtue of the issue of that certificate, becomes an exempted company; (b) the memorandum and articles of association adopted in the conversion consent shall take effect, the conversion applicant shall cease to be registered a s a limited liability company (and the register of limited liability companies shall be updated accordingly) and the LLC agreement of the conversion applicant shall cease to have effect; (c) the members of the conversion applicant shall be deemed shareho lders of the exempted company and shall receive shares with a nominal or par value, at a discount or at a premium as is provided in the conversion consent under subsection (1)(a); and
any tax undertaking given to the conversion applicant pursuant to section 58 of the Limited Liability Companies Act (202 5 Revision) shall not apply from the date of the re - registration and the exempted company may apply for an undertaking pursuant to section 6 of the Tax Concessions Act (2018 Revision) . (7) Subsection (6) shall not operate — (a) to create a new legal entity; (b) to prejudice or affect the identity or continuity of the conversion applicant; (c) to affect the property of the conversion applicant; (d) to affect any appointment made, resolution pass ed or any other act or thing done in relation to the conversion applicant pursuant to a power conferred by the LLC agreement of the conversion applicant or by the laws of the Islands;
except to the extent provided by or pursuant to subsection (6)(b), to affect the rights, powers, authorities, functions and liabilities or obligations of the conversion applicant or any other person; or
to render defective any legal proceedings by or against the conversion applicant. (8) Any legal proceedings tha t could have been continued or commenced by or against the conversion applicant before its re - registration under this section may, notwithstanding the re - registration, be continued or commenced by or against the conversion applicant after re - registration. (9) A certificate of re - registration issued under this section is conclusive evidence that — (a) the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with; and (b) the conversion applicant is an exempted company . 233B. Conversion of a foundation company to an exempted company 233B .( 1 ) Subject to this section, a foundation company (the “ conversion applicant ”) may be re - registered as an exempted company if — (a) the conversion ap plicant passes a special resolution that it should be so re - registered; and (b) the conversion applicant applies to the Registrar for re - registration and submits the documents specified by the Registrar under subsection (3). (2) The special resolution under subsection (1)(a) shall adopt — (a) a registration declaration for the conversion applicant as an exempted company; and (b) memorandum and articles of association in conformity with the requirements of this Act to take effe ct upon re - registration of the conversion applicant. (3) An application under subsection (1)(b) shall be signed by a director or authorised person of the conversion applicant, and accompanied by a copy of the registration declaration under subsection (2) (a) and a certificate of good standing for the conversion applicant. (4) The conversion applicant shall submit with an application under subsection (1)(b), a re - registration fee equal to the annual fee payable by an exempted company pursuant to section 1 69(1). (5) If, on an application under this section, the Registrar is satisfied that a conversion applicant may be re - registered under this section as an exempted company, the Registrar shall — (a) retain (in such form as the Registrar may determine) t he application and other documents delivered to the Registrar under this section; (b) issue to the conversion applicant a certificate of re - registration stating that the conversion applicant has been re - registered as an exempted company; and (c) enter such details in the Register in respect of the exempted company’s re - registration as the Registrar considers appropriate. (6) Subject to subsection (7), upon the issue of a certificate of re - registration to an exempted company under subsection (5)(b) — (a) the conversion applicant, by virtue of the issue of that certificate, becomes an exempted company; (b) the memorandum and articles of association adopted in the special resolution shall take effect and the conversion applicant shall cease to be regi stered as a foundation company (and the register of foundation companies shall be updated accordingly) and the memorandum and adopted articles of the conversion applicant shall cease to have effect; and (c) any tax undertaking given to the conversion app licant shall not apply from the date of the re - registration and the exempted company may apply to the Cabinet for an undertaking pursuant to section 6 of the Tax Concessions Act (2018 Revision) . (7) Subsection (6) shall not operate — (a) to create a ne w legal entity; (b) to prejudice or affect the identity or continuity of the conversion applicant; (c) to affect the property of the conversion applicant; (d) to affect any appointment made, resolution passed or any other act or thing done in relatio n to the conversion applicant pursuant to a power conferred by the memorandum and the adopted articles of the conversion applicant or by the laws of the Islands; (e) except to the extent provided by or pursuant to subsection (6)(b), to affect the rights, powers, authorities, functions and liabilities or obligations of the conversion applicant or any other person; or (f) to render defective any legal proceedings by or against the conversion applicant, and any legal proceedings that could have been continued or commenced by or against the conversion applicant before its re - registration hereunder may, notwithstanding the re - registration, be continued or commenced by or against the conversion applicant after re - registration. (8) A certificate of re - r egistration issued under this section is conclusive evidence that — (a) the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with; and (b) the conversion applicant is an exempted com pany.

Cross References