A compelling article by the Law Society Gazette regarding a reverse cross-border merger and its significance post-Brexit. The article explains the importance of these mergers in the current landscape. The judgment the other week was the first time that a 'reverse cross-border merger' had been allowed under English law. The barrister who represented the company in the case noted that this was likely to be the first of many such mergers.
The High Court has cleared the way for UK companies to be absorbed by European subsidiaries as they restructure in response to the UK decision to leave the EU. The mechanism of a ‘reverse cross-border merger’ is set out in an EU directive, but had not previously been permitted under English law. That has changed with a ruling by registrar Clive Jones sitting in the Commercial Court. The parent company, Formenta Ltd, has now been absorbed by its Italian subsidiary Newco Immobiliare. The reverse merger is ‘the first of many’, according to the company’s legal team.