Companies Act 2014 section 1132

Directors' explanatory report

Section 1132 requires the directors of each merging company to prepare a written explanatory report setting out and justifying the terms of a proposed merger, subject to certain exemptions.

• Directors of each merging company must prepare a separate written explanatory report, except in the case of a merger by absorption
• The report must cover the draft merger terms, the legal and economic rationale, the share exchange ratio methodology, and any valuation difficulties encountered
• The report must be signed on the same date by two directors of each merging company (or by the sole director where a company has only one)
• The requirement for the report can be waived if all voting shareholders (and, where relevant, all securities holders whose consent is needed for votes to take effect) agree to dispense with it