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Implementation of the Cross-Border Merger Directive in the Netherlands

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Cross-Border Mergers

Part of the book series: Studies in European Economic Law and Regulation ((SEELR,volume 17))

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Abstract

In this paper, first a general analysis of the implementation of the CBM Directive in the Netherlands will be discussed, as well as the number of announced CBMs in which a Dutch company is involved. After that, more specific Dutch characteristics will be analyzed, such as the possibility of an inbound triangular merger, minority shareholder protection and the protection of creditors.

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Notes

  1. 1.

    Although the CBMD has been codified with Directive 2017/1132, this contribution will refer to the CBMD. When it concerns specific Articles, however, reference will in most cases be made to the Articles in Directive 2017/1132.

  2. 2.

    Act of 27 June 2008, Bulletin of Acts, of 27 June 2008, no 260. Next to ten other Member States the Netherlands was too late with the transposition.

  3. 3.

    An exception was van Solinge (1994). After the Sevic-case (C-411/03) in 2005 and before the transposition of the CBMD in the Netherlands, cross-border mergers were possible in the Netherlands based on the freedom of establishment of Article 49 and 54 TFEU. See e.g. Court of Amsterdam (Kantonrechter), 29 January 2007, ECLI:NL:RBAMS:2007:BA3383.

  4. 4.

    The rules on domestic mergers can be found in Chapter 1 (General provision), 2 (General provisions regarding mergers) and 3 (Special provisions for mergers of public (NV’s) and private limited liability companies (BV’s)) of Title 7 Book 2 DCC.

  5. 5.

    See Art. 2:333e DCC and par. 4 below for this publication requirement. When there are more merging companies with registered office in the Netherlands, they may comply with a joint publication (Art. 2:333e(2) DCC). No cross-border merger shows up at the Staatscourant for 2016. It is, however, not likely that no cross-border merger had taken place that year. On the other hand, the number of 789 includes several mergers within one group of companies.

  6. 6.

    In 17 announcements no information on this topic was provided.

  7. 7.

    As a limitation, Art. 2:310 DCC states that legal persons may (only) merge with legal persons of the same type. For the purpose of this Article, public and private limited liability companies are regarded as legal persons of the same type.

  8. 8.

    Other companies can be involved in a cross-border merger based on the freedom of establishment of Article 49 and 54 TFEU. See amongst others the Sevic-case (C-411/03).

  9. 9.

    See for both Dutch company types, often also translated as Open/Closed companies, Directive 2017/1132 Annex II. Although in practice almost all listed Dutch companies are public limited liability companies, most Dutch public limited liability companies are not listed.

  10. 10.

    See for the definition of a limited liability company, Art. 119 Directive 2017/1132.

  11. 11.

    See also Art. 2:333b DCC. According to Bech-Bruun & Lexidale (2013), p. 711, the definition of the Dutch national law is narrower than the respective one in Article 1 CBMD, for two reasons. Only one reason, however, is mentioned, and although the Dutch definition is shorter, it does not seem to be narrower.

  12. 12.

    Kamerstukken II (Parliamentary Papers II) 2006-2007, 30 929, nr. 3 (Explanatory Memorandum), p. 4/5.

  13. 13.

    See Art. 2:334b(2) and 2:333c(4) DCC. Compare Art. 3(3) CBMD. See further van der Bijl and Oldenburg (2010), p. 229; Bech-Bruun & Lexidale (2013), p. 714. Because of an amendment in the definition of an open-ended investment institution in the Dutch Financial Supervision Act, the reference in Art. 2:334b(2) DCC to that act is no longer correct. See Asser/Maeijer & Kroeze (2015), nr. 458 and 426.

  14. 14.

    According to Art. 10 SE-Regulation, an SE shall be treated in every Member State as if it were a public limited-liability company formed in accordance with the law of the Member State in which it has its registered office. See for the scope further, Schutte-Veenstra (2010), pp. 411–422.

  15. 15.

    Although the Third Directive has been codified with Directive 2017/1132, this contribution will refer to the Third Directive. When it concerns specific Articles, however, reference will in most cases be made to the Articles in Directive 2017/1132.

  16. 16.

    Art. 88–90 and 119(2) Directive 2017/1132.

  17. 17.

    See Section 4, art. 110 and further Directive 2017/1132.

  18. 18.

    See Schutte-Veenstra (2013), pp. 153–154 and p. 170. She argues that with Directive 2009/109/EC Member States have an obligation to implement this merger form.

  19. 19.

    See: Schoonbrood and Bosveld (2006), par. 4; Schutte-Veenstra (2013), p. 170.

  20. 20.

    A group is an economic entity in which legal persons and companies are organizationally connected. Group companies are legal persons and companies who are connected to each other in a group (Art. 2:24b DCC). The group company is also deemed to be a merging company. See for the merger provisions that are applicable for the group company, Art. 2:333a(3) DCC.

  21. 21.

    See: Verbrugh (2007), p. 48, with reference to literature; Gepken-Jager (2007), pp. 298–304; Schutte-Veenstra (2013), pp. 154–155; Zaman et al. (2009), pp. 35 and 185.

  22. 22.

    See Kamerstukken II 2006-2007, 30 929, nr. 7, p. 1/2. Next to the Netherlands, Finland allows cross-border triangular mergers, see Bech-Bruun & Lexidale (2013), p. 104.

  23. 23.

    Kamerstukken II 2006-2007, 30 929, nr. 3, p. 5.

  24. 24.

    See Asser/Maeijer & Kroeze (2015), nr. 431 and further.

  25. 25.

    See for more details on the procedure: (for domestic mergers) Verbrugh (2007); Zaman et al. (2009); van der Bijl and Oldenburg (2010), p. 234 and further; Asser/Maeijer & Kroeze (2015), nr. 431 and further.

  26. 26.

    See Art. 4(1b and 2), 6(2c) and 7 CBMD. See for art. 6 and 7 CBMD below. See for the protection of creditors in domestic mergers in the Netherlands, Germany, France and Switzerland, Verbrugh (2007).

  27. 27.

    See Raaijmakers and Olthoff (2008), p. 35.

  28. 28.

    See Art. 99 Directive 2017/1132, for some additional guidelines to Member States on this adequate system of protection.

  29. 29.

    See for the systems in different Member States, Bech-Bruun & Lexidale (2013), p. 54. See further: van Solinge (1994), p. 277; Raaijmakers and Olthoff (2008), p. 37.

  30. 30.

    See also Boschma and Schutte-Veenstra (2012a, b). See for more specific provisions for pledge and usufruct in case of a merger, Raaijmakers and Olthoff (2008), p. 36; van der Bijl and Oldenburg (2010), p. 232.

  31. 31.

    As mentioned by Bech-Bruun & Lexidale (2013), p. 55.

  32. 32.

    van der Bijl and Oldenburg (2010), p. 247.

  33. 33.

    See (for domestic mergers): Verbrugh (2007); Ten Voorde (2006); Bech-Bruun & Lexidale (2013), p. 217.

  34. 34.

    Raaijmakers and Olthoff (2008), pp. 34 and 35, state that in a legal merger there is an inherent risk that the liabilities of the acquiring company will exceed the assets. In my opinion, only in a group merger with no shares alloted this risk is likely.

  35. 35.

    See Art. 2:333e DCC.

  36. 36.

    E.g. where a creditor from the Netherlands can only ask for additional safeguards before the merger, whereas German creditors can ask for additional safeguards after the merger. If additional safeguards are being granted after the merger to the German creditors, this can negatively affect the Dutch creditors.

  37. 37.

    See for the explanatory memorandum, Art. 2:313, 2:327 DCC and par. 4 above.

  38. 38.

    Art. 121(2) Directive 2017/1132. The Dutch legislator followed the advise from the Dutch Committee on Company Law. See Kamerstukken II 2006-2007, 30 929, nr. 3, pp. 16–17. See for an overview on Member States who have used to option provided in Article 4(2) CBMD: Bech-Bruun & Lexidale (2013). See also Wyckaert and Geens (2008), par. IV.

  39. 39.

    Wyckaert and Geens (2008), p. 43.

  40. 40.

    See: van Solinge and van Boxel (2008), pp. 888–890; Leijten (2007), p. 307.

  41. 41.

    For the purpose of this Article holders of depository receipts as meant in Article 2:118a DCC are equated with shareholders (Art. 2:333h(4) DCC).

  42. 42.

    The amount of the compensation normally equals the value of the shares in the disappearing company the moment the draft merger terms are filed, but this does not always have to be the case, since the minority could object to the exchange ratio. See Kamerstukken II 2006-2007, 30 929, nr. 3, pp. 18–19. See also Wyckaert and Geens (2008), p. 48; Gepken-Jager (2007), p. 301.

  43. 43.

    See critically on the fact that the procedure is carried out by independent experts and not by an independent tribunal: Leijten (2007), p. 307; Boschma and Schutte-Veenstra (2012a, b).

  44. 44.

    See: Verbrugh (2011); van Solinge and van Boxel (2008), pp. 888–890.

  45. 45.

    Compare Section 13.27 European Model Companies Act.

  46. 46.

    Since the Dutch reform on the private limited liability company (BV), shareholders without voting right or dividend right can resign from the company if the acquiring company is not a BV (Art. 2:330a DCC). The reason for that is that only BV’s can issue shares without voting right or dividend right.

  47. 47.

    Kamerstukken II 2006-2007, 30 929, nr. 3, pp. 16–17 and Kamerstukken II 2006-2007, 30 929, nr. 7, p. 15.

  48. 48.

    See: van Solinge (2007), p. 679; Leijten (2007), p. 307; Wyckaert and Geens (2008), pp. 39–40.

  49. 49.

    Although the different treatment could make a cross-border merger less attractive, the case law of the ECJ shows that minority protection can be a justified reason for a restriction on the freedom of establishment.

  50. 50.

    Criticism can therefore be raised to the fact that no special minority protection is available in Dutch law when the Dutch public limited liability company disappears when forming an SE.

  51. 51.

    Wyckaert and Geens (2008), pp. 39–40. They compare public limited liability companies from some Member States to suggest that the differences are not too big in Europe. Harmonization has mostly been realized for public liability companies, however, and less or not at all for other types of limited liability companies in the Member States. Wyckaert & Geens do, however, (indirectly) also plea for more harmonization.

  52. 52.

    Case C-635/11. Art. 2:334k(2) and 2:333k(3c) DCC was introduced in 2015. See for these provisions below.

  53. 53.

    See Kamerstukken II 2006-2007, 30 929, nr. 3, p. 24. See also Bech-Bruun & Lexidale (2013), p. 733; van der Bijl and Oldenburg (2010), p. 247.

  54. 54.

    See for dependent companies Article 2:152 and 2:262 DCC. Under certain circumstances, a less strict structure regime or an exemption for the regime can apply. Companies with a works council can also voluntarily apply the structure regime.

  55. 55.

    Since 2013 the structure regime can also be applied in a one-tier board system. In that case the provisions that apply to supervisors are equally applicable to non-executive directors (Art. 2:164a and 2:274a DCC).

  56. 56.

    Furthermore, a number of important decisions of the Board of Directors need approval of the Supervisory Board. See Art. 2:164 and 2:274 DCC.

  57. 57.

    See Art. 2:158 and 2:268 DCC and van der Bijl and Oldenburg (2010), p. 248.

  58. 58.

    Before 2015, Article 16(1) CBMD had not been transposed into Dutch legislation, since the Dutch legislator considered a transposition of the principle as unnecessary because the generally applicable structure regime offers sufficient employee participation. See: van der Bijl and Oldenburg (2010), p. 247; Bech-Bruun & Lexidale (2013), p. 733.

  59. 59.

    See for that system (with sometimes other paragraph numbers in the Articles due to the amendment in 2015): van der Bijl and Oldenburg (2010), pp. 249–253; Bech-Bruun & Lexidale (2013), pp. 735–737 (where ‘Environmental Impact Assessment Directive’ should be read as ‘Act Employees Involvement in a European Legal Person’).

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  1. Erasmus University Rotterdam, Rotterdam, The Netherlands

    M. A. Verbrugh

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  1. Department of Law, University of Cyprus, Nicosia, Cyprus

    Thomas Papadopoulos

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Verbrugh, M.A. (2019). Implementation of the Cross-Border Merger Directive in the Netherlands. In: Papadopoulos, T. (eds) Cross-Border Mergers. Studies in European Economic Law and Regulation, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-030-22753-1_20

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