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Cross-Border Mergers: A Private International Law Approach

Published online by Cambridge University Press:  21 May 2009

Gerard van Solinge
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Extract

In order to stimulate the common market and the cooperation between businesses therein the European Union has always tried to remove the differences between the national corporate laws of the Member States. In 1968 the first directive on corporate law entered into force and since then a number of directives have been drafted and some of them have entered into force. One of the initiatives in this field is the 1985 proposal for a tenth directive concerning the cross-border merger of public limited liability companies.

Type
Research Article
Information
Netherlands International Law Review , Volume 43 , Issue 2 , August 1996 , pp. 187 - 210
Copyright
Copyright © T.M.C. Asser Press 1996

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Footnotes

*

Attorney-at-law, De Brauw Blackstone Westbroek, Amsterdam. This article is based on the author's published doctoral thesis (see n. 1 infra).

References

1. See in general: Solinge, G. van, Grensoverschrijdende juridische fusie, Doctoral thesis, Amsterdam (1994)Google Scholar, with a summary, conclusions and recommendations in English.

2. OJ, English Special Edition (1968) (I), 41.

3. OJ (1985) C 23, 11; and also: Bulletin EC (1985) Supplement 3/85.

4. Bulletin EC (1973) Supplement 13/73.

5. See further: Report to the 1973 draft convention, in: Bulletin EC (1973), Supplement 13/73; Loussouarn, Y., ‘Le concentrationdes entreprises dans la Communauté économique européenne’, Rev. crit. (1974) pp. 236–271, pp. 455–479Google Scholar; Koppensteiner, H.G., ‘Grundlagenkritische Bemerkungen zum EWG-Entwurf eines Übereinkommens über die internationale Verschmelzung von Aktiengesellschaften’, RabelsZ (1975) pp. 405–443Google Scholar; Timmerman, L., ‘De internationalejuridische fusie’, Tijdschrift voor Privaatrecht (1976) pp. 289–327.Google Scholar

6. For the most recent proposals see: OJ (1991) C 176, 1 and OJ (1991) C 138, 8.

7. See further: Huiskes, C.R., De Europese Vennootschap, Doctoral thesis, Tilburg (1993)Google Scholar; Wehlau, A..‘The Societas Europea: A Critique of the Commision's 1991 Amended Proposal’, CMLR (1992) pp. 473–510.Google Scholar

8. OJ (1978) L 295, 36.

9. Act of 19 January 1983, Stb. 1983 No. 59, effective as from 1 January 1984.

10. Act of 29 June 1993, Belgisch Staatsblad, 21 July 1993, effective as from 1 October 1993.

11. See the 1966 article by Beitzke, G., referred to in infra n. 13, p. 20.Google Scholar

12. Ebenroth, C.Th., Münchener Kommentar zum Burgerlichen Gesetzbuch, Volume 7, EGBGB, Internationales Privatrecht (1990) no. 482 et seq.Google Scholar

13. Beitzke, G., ‘Internationalrechtliches zur Gesellschaftsfusion’, in Probleme des europäischen Rechts (Festschriftfür Walter Hallstein) (1966) pp. 14–35Google Scholar; Ibid., ‘Les conflits de lois en matière de fusionde sociétés (droitcommunautaire etdroitinternational privé)’, Rev. crit. (1967) pp. 1–22.

14. See, e.g., Bener, H.R., La fusion des sociétes anonymes en droit international privé, Doctoral thesis, Geneva (1967)Google Scholar; Züllig, R.E., Die Internationale Fusion im schweizeriscnen Gesellschaftsrecht, Doctoral thesis, Basel (1975)Google Scholar; contra: Bessenich, B., Die grenzüberschreitende Fusion nach den Bestimmungen des IPRG und des OR, Doctoral thesis, Basel (1990).Google Scholar

15. Art. 312, para. 2 (b), Book 2 Dutch Civil Code.

16. Art. 318, Book 2 Dutch Civil Code provides (as far as is relevant):

‘1. The merger shall be implemented by notarial deed and shall become effective on the day following the day on which the deed is executed. The deed may be executed only within six months after publication of the proposal or, if this is not permitted as a result of opposition that has been instituted, within one month after its withdrawal or upon an order setting aside the opposition becoming enforceable.

2. At the foot of the deed the civil law notary shall certify that he has satisfied himself that the procedural requirements for all resolutions, required by this title [i.e., Title 7 of Book 2, Dutch Civil Code] and by the articles of association for effecting the merger, were duly observed and that the further requirements of this title and of the articles of association have been performed.’

17. In my thesis I originally suggested that it would seem reasonable that the period after the merger did not exceed two or three times the period before the merger. This suggestion was criticized, with some justification, by Slagter, W.J., in RM Themis (1994) p. 292.Google Scholar

18. As defended by Timmerman, loc. cit. n. 5, p. 309.

19. Arguably, the continual extensive interpretations of Art. 5(5) ofthe Brussels Convention by the Court of Justice leaves no room for doubt as to the applicabilty of this provision to the competence of the court of the place of establishment of the dissappearing company, see, e.g., Court of Justice ofthe European Communities, 22 November 1978 (Case 33/78), Somafer/Saar-Ferngas, [1978] ECR 2183, 28 NILR (1981) p. 73.Google Scholar

20. Examples of such securities with special rights, not being shares in the company's capital, are: warrants, options, profit certificates, convertible bonds, bonds with pre-emptive rights and profit-sharing bonds.

21. Report of the Combined Company Law Commission on the tenth directive, dated 9 January 1990, pp. 15–16.

22. The tax problems seem to have diminished as a result of the implementation of the directive of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers and exchanges of shares concerning companies of different Member States, OJ (1990) L 225,10. Tax law issues are not dealt with in this article. See further, e.g., T. Daniëls, ‘The Relevance of the EC Merger Directive of 23 July 1990 in European Mergers and Reorganisations’, and Wouters, J., “The European Court of Justice and Fiscal Barriers to Companies’ Cross-Border Establishment’, both in Current Issues of Cross-Border Establishment of Companies in the European Union (1995) at pp. 91–99 and 101–141Google Scholar, respectively.

23. See further the article by P.J. Dortmond, referred to in infra n. 33, p. 22, with reference to the 1987 Advice of the Social-Economic Council on the cross-border mergers of public limited liability companies (SER-Advies 87/02).

24. Amended proposals for a fifth directive, OJ (1991) C 7, 4 and C 321, 9.

25. OJ (1994) L 254, 64.

26. Should the tenth directive not be adopted, then the cross-border merger under the provisions of the proposed European Company Statute could be an alternative. The provisions on the cross-border merger in the European Company Statute are the same as those in the tenth directive. However, the chances of adopting of a European Company Statute seem to be diminishing. See supra n. 9.

27. According to the 1995 Italian Code on Private International Law, the effectiveness of a cross-border merger is subject to the condition that all leges societatis involved have been observed. Traditionally, in Italian legal writing it is a generally accepted view that an Italian company can merge with a foreign company, applying per analogiam the rules concerning the cross-border transfer of seat (Arts. 2505 et seq; 2437 Codice Civil). See Ebenroth, C. Th. and Kaiser, A., ‘Die Reform des Internationalen GesellschaftsrechtsinItalien’, ZeitschriftfurVergleichendeRechtswissenschaft (1992) pp. 223–257.Google Scholar

28. Art. 33(4) Código Civil.

29. Model Business Corporation Act s. 11.07, Delaware General Corporation Law s. 252; New York Business Corporation Law s. 907.

30. Loussouarn, Y. and Trochu, M., ‘Conflits de lois en matièrede sociétés’, Juris Classeur: a Droit international commercial, Fascicule 564 C (1982)Google Scholar no. 405.

31. C.Th. Ebenroth, Münchener Kommentar zum Bürgerlichen Gesetzbuch, 2. Aufl., Band 7, Nach Artikel 10 EGBGB, Rn. 468 et seq.

32. Blumberg, J.P., ‘Over het grensoverschrijdend associatieconcern, zetelverplaatsing en intemationale fusie’, Tijdschrift voor Privaatrecht (1992) pp. 803–843Google Scholar; Tilquin, Th., Traité desfusions et scissions (1993)Google Scholar no. 737 et seq.

33. M.J.G.C. Raaijmakers,Rechtspersonen(looseleafedition), Comment on Art. 308, Book 2 Dutch Civil Code, para. 3, under a; Dortmond, P.J., ‘Enkele aspecten van grensoverschrijdende juridische fusie’, in Grensoverschrijdende samenwerking van ondernemingen (1992) pp. 19–30Google Scholar; Vlas, P., Rechtspersonen, Praktijkreeks IPR, vol. 9 (1993) no. 359.Google Scholar

34. It should be noted, however, that one specific provision of Book 2 of the Dutch Civil Code (Art. 138, para. 11) applies to foreign companies. Pursuant to this provision, the local managers of a foreign company which has been declared bankrupt in the Netherlands, can be held liable, under certain circumstances, if they obviously fulfilled their task improperly. See further Vlas, P., ‘The Fight Against Pseudo Foreign Corporations in The Netherlands’, in Boele-Woelki, K. et al. ., eds., Comparability and Evaluation (Liber Amicorum D. Kokkini-Iatridou) (1994) p. 309.Google Scholar

35. See my thesis, op. cit. n. 1, paras. 4.3b and 4.6.

36. See Rixen, S. and Böttcher, R., GmbH Rundschau (1993) pp. 572–575.Google Scholar

37. See Viandier, A. and Caussain, J.J., in La Semaine Juridique (JCP) éd. G. (1993) no. 44, pp. 461–462.Google Scholar

38. See Art. 318, Book 2, Dutch Civil Code, cited at supra n. 16.

39. Art. 23b, paragraph 1, Book 2, Dutch Civil Code.

40. Cited at supra n. 16.

40. The cross-border merger by formation of a new company is, technically, not a form of establishment in another Member State, as the founding companies cease to exist. See further: Eyles, U., Das Niederlassungsrecht der Kapitalgesellschaften in der Europäischen Gemeinschaft, Doctoral thesis, Konstanz (1990) pp. 118–120.Google Scholar

42. Court of Justice of the European Communities, 27 September 1988 (Case 81/87), The Queen v. H.M. Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust PLC, [1988]Google Scholar ECR 5483, in which case the European Court ruled that companies wishing to transfer their seats across the borders cannot, under Community law as it now stands, rely on the protection under the Arts. 52 and 58 EC Treaty. In my view, the Court's decision in the Daily Mail case contravenes the principles of Community law regarding the right of establishment, see further: Solinge, G. van, ‘Vestigingsvrijheid van vennootschappen’, TVVS (1991) pp. 169–174.Google Scholar

43. See further my thesis, op. cit. n. 1, Ch. 3; paras. 4.5 and 5.13.

44. Art. 331, Book 2, Dutch Civil Code.

45. Arts. 333(2) and 334, Book 2, Dutch Civil Code.

46. See further Hamilton, R.W., The Law of Corporations in a Nutshell (1991) pp. 434–438.Google Scholar

47. An example of a ‘two-phase merger’ in the Netherlands is the merger of the ABN Bank and the AMRO Bank in 1991; for a description thereof see Slijkhuis, L.H., ‘Juridische fusie ABN-AMRO’, TVVS (1991) pp. 290–292.Google Scholar

48. The extension of the scope of the third directive to private limited liability companies is in the preparatory stage.

49. See, e.g., the most recent proposal for a thirteenth directive concerning takeover bids (OJ (1996) C 162, 5); the directive on the disclosure of holdings in listed companies (OJ (1988), L 348, 62) and the various rules of conduct concerning mergers (e.g., the British ‘City Code’ and the Dutch ‘SER-Fusiegedragsregels’).

50. For further discussion see my thesis, op. cit. n. 1, paras. 1.2c and 5.14a.

51. Not all of the listed recommendations have been discussed in this article. See further my thesis, op. cit. n. 1.