Cross-border mergers and recent developments in corporate law Andrew Thornton Erskine Chambers

Introduction Why talk about cross-border mergers? What advantages are there to cross-border mergers? What is a cross-border merger? Which States can be the subject of a cross-border merger with a UK company? Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, The Irish Republic, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain (but not the Canary Islands), Sweden, The UK (but not the Channel Islands)

The effect of a XBM What is the effect of a cross-border merger? What is the concept of universal succession? How does a cross-border merger differ from a domestic merger? How does a cross-border merger differ from an acquisition structure? Can a merger be undertaken between two English companies?

The Procedure What procedural steps are involved in obtaining the approval of a cross-border merger? What types of merger are there? What is a merger by absorption? What is a merger by absorption of a wholly owned subsidiary? What is a merger by formation of a new company? Can a parent company be merged into its subsidiary? Are the steps the same irrespective of the form of merger? Can the procedure be used to undertake a domestic cross-border merger? Can an arms’ length merger be undertaken pursuant to the CBMR?

THE MERGER DOCUMENTS What documents need to be produced? What are the requirements for the draft merger terms? Is there a variation to the consideration in the event that the transferor already holds shares in the transferee? Can additional commercial terms be set out in the draft terms? What are the requirements for a directors’ report? When is an independent report required? Who provides the independent report? What qualifications must a proposed independent expert possess? What information should the report contain? What are the circulation requirements of the merger documents?

THE INTERESTS OF THE MERGING COMPANIES’ STAKEHOLDERS Which stakeholders are protected under the CBMR 2007? How does a cross-border merger impact on the shareholders of a dissolving company? How does a cross-border merger impact on the interests of the shareholders of the surviving company? When do the members need to approve the proposed cross-border merger? Is a meeting of the members required in all cases? What are the requisite majorities required to be obtained at the members’ meeting? Can the draft terms of merger be approved by a written resolution rather than holding a members meeting? Can the members’ meeting to approve a cross-border merger be held on short notice?

Impact on the creditors How does a cross-border merger impact on the interests of the creditors of the surviving company? How does a cross-border merger impact on the interests of the creditors of a dissolving company? What if a contractual provision prohibits a cross-border merger? What test will the court apply in assessing the impact of a proposed cross-border merger on the interests of creditors of a merging company? What circumstances will give rise to the need to hold a meeting of creditors? How can the creditors of a merging company be prejudiced? What are the requisite majorities required to be obtained at the creditors’ meeting?

Impact on employees What is the impact of a cross-border merger on the employees of the surviving company? What is the impact of a cross-border merger on the employees of a dissolving company? How are the interests of employees addressed? Is a UK merging company under any other duty to notify or publicise a proposed cross-border merger transaction? What obligations does Companies House have following receipt of the documents referred to above?

The Role of the Court When does a cross-border merger take effect ? How many applications must be made to Court? How long will it take me to complete a cross-border merger? Impact of the Takeover Code Trifling failure to comply with jurisdictional requirements?

RECENT DEVELOPMENTS IN CORPORATE LAW Introduction of the self-help reduction of capital procedure Abolition of financial assistance for private companies Changes to the Takeover Code to prohibit implementation agreements The Maxima Case