For a mergers with the participation of a Soci\u00e9t\u00e9 Anonyme participates, the law provides for specific rules that supplement the general merger framework. These rules reflect the capital-based structure of the S.A. and the existence of different classes of shareholders, bondholders and other holders of rights. In this article, we examine the special provisions governing information requirements, additional approvals and the protection of special rights. For management and legal advisers, it is critical to identify the relevant right holders, the required actions and the applicable deadlines at an early stage. This review should precede the finalisation of the merger roadmap and timetable.<\/p>\n
Where a Soci\u00e9t\u00e9 Anonyme participates in a merger, the general merger rules apply together with the special provisions governing S.A. companies (Articles 30\u201338). These provisions cover, among other matters, information to shareholders, special classes of shares, bondholders and holders of other securities. They apply both to mergers by absorption and, as appropriate, to mergers by formation of a new company. Where no special provision applies, the law governing Soci\u00e9t\u00e9s Anonymes (Law 4548\/2018) applies on a supplementary basis.<\/p>\n
Accordingly, the legal review must combine the rules governing the corporate transformation with those governing the corporate bodies, shares and securities of the S.A.<\/p>\n
Shareholders of the Soci\u00e9t\u00e9 Anonyme must be given timely access to the key merger documents (Articles 11 and 31). Such access must be continuously available for a period beginning at least one month before the General Meeting and continuing until the conclusion of the meeting.<\/p>\n
The documents include the draft merger agreement and the financial statements and management reports for the preceding three financial years. Where required, they also include the interim accounting statement, the management report on the merger and the experts\u2019 report. Upon a simple request, a shareholder is entitled to receive, free of charge, a complete copy or extract. Subject to certain conditions, the law also permits these documents to be made available electronically through the company\u2019s website (Article 11).<\/p>\n
The information requirement is not a mere formality. Management must ensure that all required documents are complete, accessible and available throughout the statutory period. Depending on the seriousness of the defect, incomplete or late disclosure may affect the validity of the resolution approving the merger.<\/p>\n
Where the approving resolution is null and void or voidable, the judicial declaration of nullity of an already completed merger may become an issue (Article 20). Subject to the specific statutory requirements, the relevant application must be filed within three months from registration of the merger with G.E.MI.<\/p>\n
At the same time, the members of the Boards of Directors of both the absorbing and absorbed companies are liable towards their respective shareholders for loss caused by a culpable breach of their duties in the preparation or implementation of the merger (Article 19). The separate liability of each Board member towards the company itself for loss resulting from a breach of their duties remains unaffected (Article 102 of Law 4548\/2018).<\/p>\n
For this reason, it is advisable to maintain records evidencing which documents were made available, when and how they were made available, and for how long.<\/p>\n
Where more than one class of shares exists, the merger may adversely affect rights specifically attached to one or more such classes. In that case, the resolution of the General Meeting is additionally subject to the approval of each class of shareholders whose rights are affected (Article 32). Protection does not depend solely on an express amendment to the Articles of Association, but on whether the merger substantively affects the rights attached to the relevant class.<\/p>\n
Approval is granted by a separate meeting of the shareholders of the affected class, subject to the enhanced quorum and majority requirements prescribed for Soci\u00e9t\u00e9s Anonymes (Article 130(3)\u2013(4) and Article 132(2) of Law 4548\/2018).<\/p>\n
For management and its legal advisers, the critical work must therefore take place before the meeting: the different classes of shares, the rights and privileges attached to them and any relevant provisions of the Articles of Association must be mapped in advance.<\/p>\n
The role of the separate class meeting is one of approval. It does not redesign the draft merger agreement, but approves or rejects the General Meeting resolution insofar as the affected class is concerned. Any issue relating to special rights must therefore be identified and addressed before the relevant corporate bodies are convened.<\/p>\n
The required approval of each affected class is a prerequisite for the valid completion of the corporate approval process for the merger. If such approval is omitted, the procedure should not proceed in its existing form. If, despite that omission, the merger is completed on the basis of a null and void or voidable approving resolution, the statutory mechanism for challenging the merger may be triggered (Article 20).<\/p>\n
In practice, therefore, protection begins before any resolutions are adopted. Management and, in particular, legal advisers require a complete matrix of share classes, rights, required approvals and deadlines in order to prevent defects at closing.<\/p>\n
Bondholders are protected as creditors of the company, although the special protection mechanism does not apply indiscriminately to every claim (Articles 13 and 33). It applies to claims that arose before completion of the disclosure formalities for the draft merger agreement and had not yet fallen due.<\/p>\n
Within thirty days from completion of those disclosure formalities, a bondholder may request appropriate safeguards from the company. For the obligation to provide such safeguards to arise, it must be sufficiently demonstrated that the merger makes additional security for the claim necessary. Furthermore, the bondholder must not already have received adequate safeguards in respect of the same risk (Article 13).<\/p>\n
If the company does not provide the required security, or if a dispute arises as to its adequacy, the bondholder may apply to the competent court. The application must likewise be filed within the same thirty-day period and is heard under the procedure applicable to interim measures. The court may order such appropriate measures as it considers necessary to secure the specific claim (Article 13).<\/p>\n
Accordingly, the protection operates as a mechanism for securing claims rather than as a general right to suspend or veto the merger.<\/p>\n
This special mechanism does not apply to bondholders who approve the merger (Article 33). Approval may be granted individually or, where bondholders are organised as a group, by resolution of the meeting of the relevant group.<\/p>\n
Where several groups or several bond loans exist, the review must be conducted separately for each. Before concluding that approval has been validly granted, the terms of the bond loan, the rules governing the relevant group and the authority of the meeting must be reviewed.<\/p>\n
Approval excludes the special safeguard protection described above; it does not automatically extinguish separate contractual rights arising under the terms of the bond loan. If approval is not granted, the merger does not become invalid for that reason. The bondholder nevertheless retains the right to request security, provided that the above requirements are satisfied and the thirty-day deadline is observed.<\/p>\n
In addition to shareholders and bondholders, special protection is afforded to holders of securities other than shares that confer special rights (Article 34). Depending on their terms of issue, this category may include founders\u2019 certificates, share acquisition securities and other instruments carrying specific proprietary rights.<\/p>\n
These securities must be identified before the draft merger agreement is finalised, as their existence will not necessarily become apparent from an examination of the share capital alone.<\/p>\n
The absorbing company must grant the holders of such securities rights at least equivalent to those they held in the absorbed company (Article 34). At the same time, the draft merger agreement must specify the rights to be granted to them or the measures proposed in relation to them (Article 7).<\/p>\n
Equivalence does not necessarily require an identical legal form. It does, however, require the substantive legal and economic value of the relevant right to be preserved.<\/p>\n
Such rights may be modified only with the consent of each holder of the relevant security (Article 34). Consent is individual and cannot be replaced by collective approval. The team responsible for the merger must therefore identify not only the securities that exist, but also the persons who hold the corresponding rights.<\/p>\n
The law (Article 34) does not provide for a separate, specific mechanism for challenging the merger where the obligation to grant equivalent rights has been breached. This does not, however, mean that such a breach is without consequences.<\/p>\n
Depending on the nature of the security and the right concerned, claims may arise for the grant of the equivalent right owed or for compensation for loss under the applicable general provisions. Where the breach is also connected with a defect in the corporate resolution approving the merger, the question of validity requires separate assessment under the rules governing challenges to the merger (Article 20).<\/p>\n
For the absorbing company, the safer approach is to identify all relevant securities at an early stage and definitively address the rights attached to them before corporate approval of the merger.<\/p>\n
The special rules governing the participation of a Soci\u00e9t\u00e9 Anonyme in a merger do not merely add procedural steps to the overall process. They allocate specific risks among management, shareholders, bondholders and holders of other securities.<\/p>\n
Sound planning begins with a comprehensive mapping of share classes, bond loans, other securities, rights, required approvals and critical deadlines. Particular attention must be paid to distinguishing between defects capable of affecting corporate approval and breaches that primarily give rise to protective or compensatory claims.<\/p>\n
This distinction directly affects closing, liability management and transaction costs.<\/p>\n
In the next article, we examine simplified mergers by absorption where the absorbing Soci\u00e9t\u00e9 Anonyme holds 100% or at least 90% of the absorbed company. We also examine acquisition, which is treated in the same manner as a merger by absorption, and the protection available against an unjustifiably low acquisition consideration.<\/p>\n
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