Court of Appeal overturns decision in Easynet cross-border case (Easynet Global Services Ltd)

Court of Appeal overturns decision in Easynet cross-border case (Easynet Global Services Ltd)

Corporate analysis: The Court of Appeal has considered whether a UK company could effect a merger pursuant to the Cross-Border Merger Regulations 2007 where the only non-UK EEA company involved in the transaction was a dormant entity. Overturning the Companies Court’s earlier decision, the Court of Appeal held that the transaction fell within the scope of the Regulations.

Original news

Easynet Global Services Ltd v Secretary of State for Business, Energy & Industrial Strategy [2018] EWCA Civ 10

The Court of Appeal considered whether a UK company could effect a merger pursuant to the Cross-Border Merger Regulations 2007, SI 2007/2974 as amended by SI 2008/583 and SI 2011/1606 (the Regulations) where the only non-UK EEA company involved in the transaction was a dormant entity. Overturning the Companies Court’s earlier decision, the Court of Appeal held that the transaction fell within the scope of the Regulations.

What was the background to the case?

In 2016 Easynet Global Services Ltd (Easynet) applied to the Companies Court for permission under the Regulations to convene a meeting of its sole shareholder. This was intended to be the first step in a series of procedural steps under the Regulations whereby a number of companies (all of which were part of the same group) would be merged in to Easynet.

Only one of the companies involved in the proposed merger, a Dutch subsidiary (BV), was registered in a non-UK EEA state. This company was dormant, had never traded and had no appreciable assets.

The Companies Court interpreted the Directive (as defined below) and the Regulations in a purposive way and decided that, since BV had no substance and was only included in the merger proposal in order to bring it within the scope

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