by Martin Arendts, M.B.L.-HSG, Rechtsanwalt (Attorney-at-Law)
The Directive (EU) 2019/2121 of 27 November 2019 (also known as the Mobility Directive), which entered into force on 1 January 2020, regulates the cross-border division of companies for the purpose of new incorporation and the cross-border change of legal form (in the form of transfer of registered office). In addition, the already existing regulations on cross-border mergers are amended.
The
requirements of the EU Conversion Directive must already be implemented in
national law by 31 January 2023. On 20 April 2022, the German Federal Ministry
of Justice presented a corresponding draft bill (“Referentenentwurf”) on the
implementation of the EU Conversion Directive.
The planned
law on the implementation of the Conversion Directive also contains new
provisions aimed at speeding up appraisal proceedings under the German Act on
Appraisal Procedures (SpruchG, Spruchverfahrensgesetz of 12 June 2003) without,
according to the Ministry, curtailing the rights of the parties to the
proceedings. The simplification potentials uncovered during an evaluation are
to be raised with the proposed amendments. In addition, the substantive
amendments to the Conversion Act to be made in implementation of the Directive
provisions require procedural consequential amendments, for which the draft
bill provides for amendments to the Spruchverfahrensgesetz. In addition, there
are amendments that are not directly related to the provisions of the
Directive, such as the provision for obligatory legal representation in
appraisal proceedings, the possibility of a majority settlement and the
abolition of the non-interlocutory decision in appraisal proceedings.
The scope
of application of appraisal proceedings is expanded. For example, the draft
bill standardises a right of withdrawal against cash compensation and a claim
for improvement of the exchange ratio in the case of cross-border mergers and
divisions in order to protect minority shareholders. The existing unequal
treatment of minority shareholders of transferring and acquiring companies in
the case of mergers will be ended by making the appraisal proceedings available
to both groups of minority shareholders in the future.
An
important change in the consideration to be paid is that in the case of mergers
involving public limited companies and partnerships limited by shares, the
obligation to pay cash can be replaced by the granting of shares as
compensation in the case of an inappropriate exchange ratio. According to the
Ministry, this protects liquidity and facilitates investments in the course of
restructuring.
In
procedural terms, the biggest change is likely to be the provision for legal
representation in appraisal proceedings in the new section 5 of the Act on Appraisal
Procedures (SpruchG): "Before the
regional courts, the higher regional courts and a supreme regional court, the
parties must be represented by a attorney-at-law. Before the Federal Supreme
Court, the parties must be represented by an attorney-at-law admitted to the
Federal Supreme Court. Sentence 1 shall not apply to the joint representative."
The new
section 11a SpruchG is intended to introduce the possibility of a majority
settlement. A settlement, accepted by a majority of the applicants and the joint
representative, can be taken into account by the court in its value estimation:
"If the defendant, the joint
representatives and such applicants who jointly hold at least 90 per cent of
the share capital of all applicants agree on a certain compensation, the court
may take its amount into account in its estimation."
A new
version of section 12 (1) SpruchG is obviously intended to abolish the required
decision of non-redress, which in practice has so far only contributed to a
prolongation of the proceedings. Thus, the draft bill provides that section 68
(1) FamFG (which provides for a decision of non-redress of the court) will no
longer be applied to appraisal proceedings.
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