Reduction of Reporting and Documentation Requirements and Alternative Disclosure in Mergers and Divisions
On 1 July 2011, for purposes of implementing some European
Directives, various procedural rules in Book 2 of the Dutch Civil
Code relating to mergers and divisions of legal entities have been
amended. As a result of these law amendments, a number of reporting
requirements that apply in the case of certain mergers and
divisions have been abolished and, if all shareholders agree, the
opportunity is offered to waive certain reporting requirements in
the case of mergers and divisions. Except in the case of a division
of part of the capital of a dividing company into a newly
incorporated acquiring company of which the shares are held equally
by the shareholders of the dividing company, the intended reduction
of costs of this legislation is small. In addition, it is made
possible to post copies of documents on the website of the Chamber
of Commerce and on the website of the companies instead of filing
them with the offices of the Chambers of Commerce as required
pursuant to the procedures for mergers or divisions of legal
entities.
On 1 July 2011 some provisions of Book 2 of the Dutch Civil Code
("DCC") relating to mergers and divisions of legal
entities have been amended. This amendment was set out in the Act
to amend Book 2 of the Dutch Civil Code implementing Directive no.
2009/109/EC of the European Parliament and the Council of the
European Union of 16 September 2009 to amend Directives nos.
77/91/EC, 78/855/EC and 82/891/EC of the Council and Directive no.
2005/56/EC as regards reporting and documentation requirements in
the case of mergers and divisions (OJ L 259), adopted on 12 May
2011. These European Directives intended to reduce the
administrative burden to the minimum needed in order to protect the
interests of other stakeholders, and had to be implemented into
national legislation in all Member States no later than 30 June
2011. The Act had already been prepared by the previous Cabinet and
was finally adopted on 12 May 2011.
As a result of these law amendments, a number of reporting
requirements that apply in the case of certain mergers and
divisions are abolished and, if all shareholders agree, the
opportunity is offered to waive certain reporting requirements in
the case of mergers and divisions. In summary, the law amendments
are as follows:
- No written explanation to a merger: It is permitted
to waive the obligation of the board to mention the reasons for
the merger in the written explanation to a merger with comments
on the legal, economic and social aspects, if all members or
shareholders of the merging legal entities agree to this.
- No obligation to draft an interim statement of assets
and liabilities in the case of a merger or division: The
boards of the legal entities involved in the merger or division
are exempted from the obligation to draft an interim statement
of assets and liabilities (if more than six months have passed
after the balance sheet date of the last adopted annual
accounts), if they already draft half-yearly financial accounts
pursuant to Section 5:25d of the Dutch Financial Supervision
Act.
- No obligation to inform the general meeting and other
merging legal entities: With the consent of all members or
shareholders of the merging legal entities, the boards of the
legal entities involved in the merger or division do not have
to inform the general meeting and the other legal entities to
be merged about changed circumstances that come to light after
the merger proposal has been filed.
- Resolutions relating to a merger by the board of the
dividing company: If the acquiring companies keep all
shares in the dividing company, the dividing company may
resolve to divide in a board resolution, unless the articles of
association stipulate otherwise.
- No explanation, interim statement of assets and
liabilities, and no auditor's reports required in the case
of a division into a sister company to be incorporated as part
of the division: In the case of a division in which all
acquiring companies in the division are incorporated and the
shareholders of the dividing company become shareholders of
each of the acquiring companies, pro rata to their share in the
dividing company, the specific procedural rules do not apply.
In that case, the board of the dividing company need not draft
the written explanation of the reason for the division, nor (if
more than six months have passed after the balance sheet date
of the last adopted annual accounts) an interim statement of
assets and liabilities. Moreover, the board of the dividing
company is exempted from the auditor's report and audit
report regarding the exchange ratio applied in the division, as
well as from the auditor's reports confirming (i) that the
shares to be issued by the acquiring companies to be
incorporated have been paid up as a result of the division, and
(ii) that the part kept of the capital of the dividing company
after the division is at least equal to its issued capital with
the statutory reserves or the reserves under the articles of
association.
Except in the case of a division of part of the capital of a
dividing company into a newly incorporated acquiring company of
which the shares are held equally by the shareholders of the
dividing company, the intended reduction of costs effect of this
legislation seems small. Of the other amendments, the exemption
from the obligation to draft an interim statement of assets and
liabilities in the case of a merger or division could have resulted
in a considerable reduction of costs. However, because there are
few companies in the Netherlands that fall under the scope of
Section 5:25d of the Financial Supervision Act, the reduction of
costs effect of this amendment of the merger and division
procedures is not big.
In addition, the Act amending the Dutch Civil Code adopted on 20
May 2010 and some other acts in connection with reduction of costs
for citizens and companies have entered into effect also on 1 July
2011. Pursuant to this act, some provisions of Book 2 of the DCC
relating to the requirement to file in the case of mergers and
divisions have been amended.
Before this act entered into effect, the filing of the merger or
division proposal with all other prescribed documents with the
Chamber of Commerce and each of the companies was required. These
amendments make it possible to disclose these documents by posting
the merger proposal of merger or division on the internet site of
the Chamber of Commerce. Also in this alternative form of
disclosure, the Chamber of Commerce will block the signatures and
home addresses, if any.
Moreover, the merging or dividing legal entities may choose to make
non-public merger or division documents electronically accessible
through their own websites and there is no need to provide a
separate copy if the documents on the website can be copied. In
that case, the merging or dividing legal entities are not obliged
anymore to make the documents available to the members or
shareholders at their office.
If you have more questions on the amendments in procedures of
merger or division, please contact
Jan Schouten.