The first cross-border mergers involving Slovak companies have been completed since the relevant EU laws were implemented into Slovak national law, including those in which the Slovak companies were ongoing legal successor companies.
Cross-border merger enables multi-national businesses to increase efficiency and restructure their groups within several jurisdictions of European Union. This was a complicated and administratively onerous process until the EU cross-border merger directive provided a uniform legal basis for all limited liability companies operating in EU member states.
This is an important step towards ensuring the proper functioning of a single market in European Union, with many benefits for merging companies such as improved liquidity, a reduced risk of insolvency, reduction in overheads and a simplified organisational structure.
One of the key elements introduced by EU law is for the legality of decisions taken and procedures implemented by the merging companies to be scrutinised by the national authorities involved. Another key element is the protection of employee rights.
The authority exercising scrutiny may be a court, notary public or other government-appointed body. Its role is to oversee compliance by the merging companies with all legal obligations and merger conditions.
The authority is also responsible for ensuring that the interests of all merger parties are protected both during the merger and after it is completed. This is important as, once a cross-border merger has taken place, national law does not allow it to be declared null and void to protect the interests of shareholders or third parties.
The procedures for cross-border mergers are similar to those for national mergers:
- draft merger terms must be prepared which are common for all companies participating in the cross-border merger
- the common draft terms must be published in the member states where any of the merging companies have their seat
- the terms may be signed (in the form prescribed for this type of cross border merger in each of the relevant member states) only when all relevant conditions have been complied with and the merger has been approved by general meetings of the participating companies (for example in Slovakia this condition must be fulfilled before signing of the common draft terms)
- the scrutinising authority in the relevant member states must then be satisfied of the legality of the merger process.
- In Slovakia, this involves a notary public issuing a certificate in the form of a notarial record confirming that the requirements for cross-border mergers have been complied with; the certificate has the form of a notarial record
- the merger then becomes effective when the registry where the acquiring company files it documents approves the registration of the merger
- the transferring companies are then de-registered by the registries with jurisdiction over them upon delivery of a notice from the foreign register court confirming the effect of the cross-border merger.
Although the process appears simple in theory, it is much less straightforward in practice, largely because the individual steps can vary considerably from member state to member state, and there is considerable variation in each country’s company law and registration rules.
For example, German, Austrian and Czech laws require a cross-border merger plan/project to be signed before the process of performing statutory conditions is started. Contrary to this, the Slovak law enables to sign the cross-border merger agreement only after all approvals and other statutory conditions are fulfilled. Once all statutory conditions have been performed and the cross-border merger plan/project/agreement has been approved by the companies in general meeting, the register court (or a notary public in the Czech Republic or the Slovak Republic) will certify that all statutory conditions for cross-border mergers are satisfied.