Under the SER Merger Code (SER Fusiegedragregels), a merger or acquisition in the Netherlands that involves an entity with 50 employees or more requires the parties to give notice of the merger to relevant trade unions. This notification should take place before any binding merger documents, like a SPA, are signed between parties. The main purpose of the SER Merger Code (“Merger Code”) is to protect the interests of employees who work for companies that may be subject to a merger or acquisition. Pursuant to the rules of the Merger Code, parties are required to timely involve employee representatives in a proposed merger or acquisition, in order to allow those representatives to give their views on the proposed transaction and on the potential impact to the employees.
Recently, the Merger Code was amended with changes that are relevant for corporate and employment mergers and acquisitions practice. Firstly, the Merger Code’s scope has been expanded. Secondly, it now introduces the option to challenge whether an actual change of control has occurred. Finally, the confidentiality obligations imposed on the involved trade unions have been strengthened.
The definition of “business sector” (bedrijfsleven) has been broadened. As of Oct. 1, 2015, a merger or acquisition involving (semi-) governmental bodies, not-for-profit organizations and professional service providers (vrije beroep), are now subject to the Merger Code’s notification requirements, if they operate on the market and are professionally organized. As a result, formerly exempt companies that are active in the health care industry, or in education, may now be subject to the notification requirements pursuant to the Merger Code, in case of a merger.
For M&A practice, this means that the scope of proposed transactions that may be subject to the notification requirements is materially expanded.
- Change of control
A change of control is assumed to take place where: (i) the right to appoint more than half of the members of the board of management, or supervisory board of the company (depending on whether a one-tier or two-tier board structure applies), is acquired; (ii) more than 50 percent of the voting rights in the general meeting of shareholders is acquired; or (iii) more than 50 percent of the share capital is acquired.
The Merger Code, as of Oct. 1, 2015, introduces the right to challenge this assumption. For example, in a case where the majority of share capital is acquired, but the shares do not have voting rights, or other shareholders hold increased voting rights, it can now be argued that no change of control is effectively taking place.
The same applies if a company being acquired is subject to the full large company regime (volledig structuurregime), where the members of the supervisory board are appointed by the supervisory board itself, instead of the shareholders. In this case, the assumption of a change of control can be refuted, and the notification requirements do not apply.
Finally, the scope of the confidentiality obligations that apply to members of the trade unions has been expanded, putting stricter requirements on the disclosure of any information relating to a proposed merger or acquisition.