The Gazette 1981

SEPTEMBER 1981

GAZETTE

Mergers, Take-overs and Monopolies (Control) Act, 1978

by

Anthony E. Collins, Solicitor

T HIS Act came into effect on 3rd day of July 1978. The purpose of this Article is merely to point out some of the salient features of the Act and to indicate some of the possible pitfalls. The Act has two applications — (a) Its application to proposed Mergers or Take-Overs which is new legislation; and (b) provisions relating to Monopolies which are grafted on to the Restrictive Practices Act, 1972. 1. Mergers: The most alarming fact, from the point of view of the practising Solicitor, is that if there is a take-over or merger which comes into the criteria of the Act and in respect of which the Minister's consent has not been obtained, then, the Act states (Section 3(1)) that title to the shares or assets involved does not pass. It could therefore happen that six months after the acquisition has apparently been completed the parties would discover that in fact no title to the shares or assets had passed. The implications of this for both client and Solicitor are to say the least alarming and in certain circumstances, the conveyancing implications are also considerable. The fundamentals of the Act insofar as it relates to mergers, are as follows:— (i) The Act applies to a proposed take-over or merger if in the most recent financial year the value of the gross assets of each of the two or more enterprises to be involved in the proposal is not less than one and a quarter million pounds (£1,250,000) or the turnover of each of those two or more enterprises is not less than two and a half million pounds (£2,500,000). (Section 2(l)(a)). Turnover in this instance means real turnover and does not include payments in respect of V.A.T. or in respect of Excise Duty. (ii) "Enterprise" effectively means a Company, partnership or individual engaging in business for profit and it also includes a Society registered under the Industrial and Providend Societies Act 1893 to 1897, a Friendly Society, a Building Society or a holding Company. The main exclusions from these definitions are Banks including Trustee Savings Banks, C.I.E.,

Local Authorities, any holders of Licence under the Road Transport Act, any Body Supplying Electricity and any Air Service, (iii) Section 1(2) of the Act states that a merger or take- over shall be deemed to be proposed when an offer capable of acceptance is made. The Act further goes on to say (Section l(2)(a)) that a merger or take-over shall be taken to exist when two or more enterprises, at least one of which carries on business in the State, come under common control. Shortly common control means where one of the enterprises has the right to appoint or remove a majority of the Board or Committee of Management in a second enterprise or has more than 30% of the voting rights in the shares provided that the first enterprise does not already hold more than 50% of the; total of such voting rights before the acquisition. Sub-Section (e) of Sub-Section 1(3) covers the situation where what is acquired is not the shares in the Company itself but all, or a substantial part of its assets. Provided the criteria for the acquisition of these assets are within the limits of the criteria which would being the acquisition of a Company within the terms of the Act, then the Act will similarly apply where the acquisition is a specific asset. Specifically excluded from the Act are the following situations:— (a) Where the enterprises come under common control because of the appointment of a Receiver or a Liquidator and, (b) Where the two enterprises involved are both wholly owned subsidiaries of the same Body Corporate. (c) Where the enterprises coming under common control do so solely as the result of a testamentary disposition or intestacy. (iv) The Minister has power to increase the financial criteria and also has power to apply the Act to any proposed merger or take-over notwithstanding that it does not fulfil the criteria. So far the Minister has only made such an Order in relation to newspapers.

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