Companies Act 2014 section 467

Directors' explanatory report

Section 467 requires the directors of each merging company to prepare a written explanatory report on the common draft terms of merger, and sets out when this requirement may be disapplied by agreement of shareholders and, where relevant, security holders.

• Directors of each merging company must prepare a separate written explanatory report, except in mergers by absorption or where shareholders (and, if applicable, security holders) unanimously agree to waive this requirement.
• The report must explain the common draft terms of merger and the legal and economic rationale, covering the proposed share exchange ratio, organisational and management structures, recent and future commercial activities, and the financial interests of shareholders and other security holders.
• Once prepared, the explanatory report must be formally approved in writing by the board of directors of the relevant company.
• The requirement can be disapplied if all voting shareholders of each merging company agree, and additionally, where security holders have a right of consent over shareholder votes, those security holders must also agree to the disapplication.