Mergers & Restructuring

Statutory mechanisms for corporate reorganisation under Companies Law (Part 12) and Schemes of Arrangement.

Mergers (Companies Law Chapter 2)

Two or more companies may merge into one of them (the "Survivor Company") or into a new company (the "New Company").

1. Merger Agreement Art 107

Must be approved by Directors. Must specify terms, conversion of shares, and Articles of the Survivor Company.

2. Shareholder Approval Art 108

A Special Resolution (at least 75% of votes) is required from each merging company.

3. Solvency Statements Art 109

Directors of each company must state they have reasonable grounds to believe the Survivor Company will be able to pay its debts as they fall due.

Liability: A Director who makes this statement without reasonable grounds commits a contravention (Art 109(5)).

4. Creditor Notice Art 110

Written notice must be given to all creditors. A creditor may object to the Court within 28 days if the merger unfairly prejudices them.

5. Registration Art 112

If no creditor objection (or Court approves), the Registrar issues a Certificate of Merger. Assets/Liabilities transfer by operation of law.

A "Compromise or Arrangement" between a Company and its creditors (or shareholders).

Court Application: The Company, a creditor, or a shareholder applies to the Court.
Meeting: The Court orders a meeting of the relevant class of creditors/shareholders.
Approval Threshold: Must be approved by a majority in number representing 75% in value of the creditors/shareholders present.
Sanction: If approved, the Court may sanction the scheme, making it binding on all.

Mechanism	Article	Trigger Threshold	Outcome
Right to Buy Out (Squeeze-Out)	Art 117	Bidder acquires 90% of shares (or 90% of a specific class).	Bidder can give notice to "squeeze out" the minority shareholders (compulsory purchase) on the same terms.
Right to be Bought Out (Sell-Out)	Art 119	Bidder acquires 90% of shares.	Minority shareholder can require the bidder to purchase their shares.

A Company may reduce its Share Capital by Special Resolution, supported by either:

Supported by a Solvency Statement signed by all Directors (Art 45).

Note: Public Companies cannot use this route.

Confirmation by the DIFC Court (Art 46).

Required for Public Companies or if directors cannot sign solvency statement.

Foreign Company + DIFC Company

A DIFC Company may merge with a foreign company (Non-DIFC) provided: