215 / 298
GAZETTE
SEPTEMBER 1981
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.
2 15