Diamond Resorts (Europe) Ltd (Applicant)
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Sales |
| Judgment Date | 04 December 2012 |
| Neutral Citation | [2012] EWHC 3576 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. 8963 (and 13 others) of 2012 |
| Date | 04 December 2012 |
[2012] EWHC 3576 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
7 Rolls Building
Fetter Lane
London
EC4A 1NL
The Honourable Mr Justice Sales
Claim No. 8963 (and 13 others) of 2012
In the matter of:
Counsel for the Applicant: Mr Thornton
THE JUDGE: This is an application for approval of cross-border merger arrangements under the Companies (Cross-Border Mergers) Regulations 2007. I am satisfied on the evidence that has been put before me that the preliminary steps which need to be fulfilled as pre-merger requirements have been complied with. The proposed merger relates to an English company, Diamond Resorts (Europe) Limited ("DREL"), which is to be the resultant corporate entity which absorbs a series of 14 Spanish subsidiary companies. Once they are merged into DREL, DREL will assume their rights and liabilities and their existence will be terminated, following procedures under Spanish law.
The evidence on which I proceed is contained primarily in witness statements of Susan Crook, who is a director of DREL and who is duly authorised by the board of directors of that company to make her witness statements on DREL's behalf. DREL is a non-trading holding company in relation to the 14 Spanish subsidiaries. The 14 Spanish subsidiaries are trading entities, particularly operating in the timeshare business. DREL is in turn held by a holding company, Diamond Resorts Group Holdings plc ("DRGH").
The application is made under regulation 16 of the 2007 Regulations, which provides at regulation 16(1):
"The court may on the joint application of all the merging companies make an order approving the completion of the cross-border merger for the purposes of Article 11 of the directive."
It then sets out certain conditions which need to be satisfied.
In the circumstances of the present case, it is the English court which is the court required at the last stage of the cross-border merger procedure to approve this cross-border merger, in compliance with the procedures set out in the relevant Directive, as implemented in English law by the 2007 Regulations. Mr Thornton makes the application on behalf of DREL and all 14 Spanish subsidiaries.
Mr Thornton accepts that, since the Court has a discretion under regulation 16(1) whether to approve the merger, it is required to consider whether it is proper to exercise that discretion in favour of approving the merger, involving a process of review over and above simply satisfying itself that the various pre-merger steps have indeed been undertaken. He submits that the exercise to be undertaken by the Court is to examine the proposed merger with a view to being satisfied that it is does not adversely affect any stakeholder in any of the merging companies (whether shareholder, employee or creditor) in any material way, and, further, that there is no other good reason why approval of the proposed merger should be refused. In my judgment that is the correct test to be applied under regulation 16(1).
A question arises in the circumstances of a case like the present, what reference should be made by the English Court to the interests of shareholders, employees and creditors of the incoming companies to be merged, which are companies located in a foreign jurisdiction? In relation to such a transaction it is the responsibility of the foreign EU Member State under the relevant Directive to nominate a "competent authority" to scrutinise the proposed transaction at the pre-merger stage. In the case of Spain it has nominated the Commercial Registry in Spain as the relevant competent authority and that authority has issued the relevant certificates required by the Directive and the 2007 Regulations in relation to the Spanish companies.
As Mr Thornton informs me, Member States have a considerable discretion as to what body they designate as the competent authority for the purposes of the Directive. Such designation may range from a court being the nominated competent authority (such as in this country and in Germany), through other bodies such as a company or...
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House-clean Ltd and Another (Applicants)
...regulation 12(4). 26 The third point raised by the learned Registrar is whether, in the light of the decision of this court in Re Diamond Resorts (Europe) Ltd [2012] EWHC 3576 (Ch), the court should, prior to granting a certificate under regulation 6, consider whether, if the merger proceed......
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Re Easynet Global Services Ltd
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...arising in Regulation 16 should be exercised in favour of the merger and in that regard I bear in mind the judgment of Sales J in Diamond Resorts (Europe) Ltd [2012] EWHC 3576 (Ch). Conditions in the order 15 In order to complete the merger the applicants ask the court to make an order whic......