A cross-border merger combines capital companies from different Member States of the European Union. The special legislative framework (Articles 53a to 53r) determines the requirements, procedure and effects of such a merger. It regulates the protection of shareholders or partners, creditors and employees, as well as the legality review. Proper preparation of these matters affects the time required for completion.<\/p>\n
A cross-border merger is one involving at least one domestic and one foreign capital company. A domestic company is a company with its registered office in Greece, provided that it has been formed in accordance with the law of a Member State of the European Union. A foreign company is a company other than a domestic company which has been formed in accordance with the law of a Member State and has its registered office, central administration or principal place of business within the European Union.<\/p>\n
The scope of application includes, among others, the Soci\u00e9t\u00e9 Anonyme (S.A.), the Limited Liability Company (E.P.E.) and the Private Company (I.K.E.). It also includes the partnership limited by shares and the European Company (SE). Certain collective investment companies that raise capital from the public, operate on the principle of risk-spreading and provide for the repurchase or redemption of their units are excluded (Article 53a).<\/p>\n
The general merger provisions (Articles 6 to 53) also apply to the participating domestic company, unless otherwise provided. Before planning the transaction, a parallel examination of the applicable law governing each participating foreign company is required.<\/p>\n
The Boards of Directors or managers of the participating companies prepare common draft terms of cross-border merger. The draft identifies the participating companies and the resulting company, the exchange ratio and any cash payments.\u00a0It also includes the arrangements for the allotment of shares or other corporate participations, the implications for employment and the valuation of the assets and liabilities being transferred. Finally, information is required concerning cash compensation, safeguards for creditors and, where necessary, employee participation in management.\u00a0Deficiencies may delay the preventive legality review and completion of the merger (Articles 53c and 53l).<\/p>\n
At least one month before the General Meeting approving the merger, the common draft terms and a notice are published in the General Commercial Registry (G.E.MI.).\u00a0The notice invites shareholders or partners, creditors and employee representatives to submit comments up to five working days before the meeting.\u00a0The required independent expert’s report is also published in G.E.MI., with the possibility of excluding confidential information.\u00a0If a General Meeting of the acquiring company is not required, the time limit is calculated by reference to the meeting of the other participating company (Article 53d).<\/p>\n
The management of the domestic company explains the legal and economic aspects of the merger in a report. It explains the implications for employees and, in particular, for the company’s future business activities.\u00a0The report includes a separate section for shareholders or partners and a section for employees. The former covers the exchange ratio and cash compensation, while the latter covers changes to employment relationships.\u00a0Separate reports are permitted, and specific exemptions are provided where the statutory conditions are met (Article 53e).<\/p>\n
The reports are published in G.E.MI. at least six weeks before the General Meeting and made electronically available to those entitled to receive them.\u00a0If employee representatives submit an opinion in due time, their opinion is attached to the report and communicated to shareholders or partners.<\/p>\n
An independent expert examines the common draft terms in relation to the domestic company and gives an opinion on the adequacy of the cash compensation and the exchange ratio.\u00a0The report is made available to shareholders or partners at least one month before the General Meeting.\u00a0The assessment is based on appropriate valuation methods and identifies any particular difficulties.\u00a0The examination and report are not required if all shareholders or partners of all participating companies agree (Article 53f).<\/p>\n
The General Meeting of the domestic company approves the common draft terms after taking note of the required reports and employee comments.\u00a0The statutory quorum and majority requirements apply, while a stricter majority provided for in the company’s statutes may not exceed 90%.\u00a0Certain simplifications permit approval by a particular participating company to be omitted.\u00a0An inadequate exchange ratio or inadequate cash compensation does not constitute an independent ground for challenging the approval decision (Article 53g).<\/p>\n
Shareholders or partners who voted against the draft are entitled, subject to conditions, to cash compensation for their participations.\u00a0A prerequisite is that, as a result of the merger, they acquire participations in a company governed by the law of another Member State.\u00a0The declaration exercising this right must be submitted within one month of the approval decision.\u00a0The compensation is paid within one month of the date on which the merger takes effect.\u00a0An action seeking additional compensation must be brought within two months of that same date.\u00a0Those who do not have or have not exercised a right of withdrawal may, within the same two-month period, claim monetary compensation for an inadequate exchange ratio.\u00a0Judicial proceedings concerning withdrawal compensation do not prevent registration of the merger (Article 53h).<\/p>\n
Creditors of the domestic company are protected where their claims arose before publication of the draft and have not yet become due.\u00a0They may request adequate safeguards if they demonstrate a risk to the satisfaction of their claims and the absence of sufficient security.\u00a0The deadline for submitting the request is three months from completion of the publication formalities for the common draft terms.\u00a0The safeguards take effect only if the merger is completed (Article 53i).<\/p>\n
The management prepares a declaration concerning the company’s financial position, referring to a date within one month of its publication.\u00a0Following reasonable enquiries, it declares that it is unaware of any reason why the resulting company would be unable to pay its obligations as they fall due in the future.\u00a0The declaration is published together with the common draft terms (Article 53i).<\/p>\n
Information and consultation with employees take place in good time, in accordance with the applicable employment law.\u00a0Subject to the prescribed statutory qualifications, they precede the decision to draw up the common draft terms and the management report.\u00a0The objective is to provide employees with a reasoned response before the General Meeting.\u00a0A separate issue is their participation in the management of the resulting company, where specific conditions are met.\u00a0In that case, existing rights are examined and, where prescribed, a negotiation procedure is initiated (Articles 53j and 53k).<\/p>\n
The Directorate of Companies of the Ministry of Development carries out a preventive legality review of the merger in relation to the domestic company.\u00a0Where the requirements are met, it issues the certificate, also reviewing the required supervisory approvals or notifications.\u00a0It also examines whether obligations towards public bodies have been satisfied or secured.\u00a0The basic review lasts up to three months from receipt of the prescribed information concerning approval.\u00a0Additional investigations into possible abuse permit a three-month extension.\u00a0If there is a further delay, the company must be informed of the reasons for it (Article 53l).<\/p>\n
The certificate is not issued if an abusive or fraudulent purpose aimed at evading or circumventing the law, or a criminal purpose, is established.\u00a0The authority assesses the factual circumstances relating to establishment, economic activity and any outstanding obligations as a whole.\u00a0Individual indications do not, in themselves, amount to a finding of abuse.\u00a0The review may nevertheless delay or prevent completion (Article 53l).<\/p>\n
The certificate is transmitted through the system of interconnection of registers to the competent authority of the Member State responsible for reviewing completion of the merger (Article 53m).<\/p>\n
If the company resulting from the merger is domestic, the Directorate of Companies carries out the final legality review.\u00a0In particular, it examines whether the companies approved the same common draft terms and whether the required employee participation arrangements were observed.\u00a0The foreign certificates establish compliance with the preceding procedures.\u00a0Where the statutory requirements are met, the cross-border merger is approved (Article 53n).<\/p>\n
Where the resulting company is domestic, the merger takes effect upon registration of the merger agreement in G.E.MI.\u00a0This date does not depend on the subsequent removal of the other companies from their respective registers.\u00a0Completion and the related information are communicated to the registers of the Member States involved through the system of interconnection of registers (Articles 53o and 53p).<\/p>\n
Upon completion of the merger, the resulting company succeeds to all the assets and liabilities of the companies that cease to exist.\u00a0Shareholders or partners acquire participations, while employment contracts and the related obligations are transferred to the resulting company.\u00a0Where special formalities are required for transfers to be effective against third parties, the resulting company must comply with them.\u00a0Once the merger has taken effect, it may not be declared null and void, without prejudice to other lawful measures and sanctions (Article 53q).<\/p>\n
Where the acquiring company holds all voting rights in the acquired companies, significant exemptions from reports and certain other stages are provided.\u00a0If it holds at least 90%, but not all, more specific simplifications apply to the domestic acquiring company.\u00a0The exceptions do not eliminate publication requirements, protection of the parties concerned or the required legality review in their entirety.\u00a0Their precise scope must be examined for each corporate structure (Article 53r).<\/p>\n
A cross-border merger requires coordination of national procedures and protection of shareholders, creditors and employees.\u00a0Timely preparation and preventive legality review reduce the risk of delays.\u00a0In our next article, we examine demergers as a distinct form of corporate transformation.<\/p>\n
<\/p>\n