On 1 September 2023, the EU Mobility Directive will be implemented by means of the adopted legislative proposal. The EU Mobility Directive creates one European framework for cross-border legal mergers, divisions and conversions ("cross-border operation"). Under current law, such cross-border operations are possible, but only a cross-border legal merger is laid down in Book 2 of the Dutch Civil Code. Cross-border divisions and conversions derive their legal force from European legislation and case law.
Intra-group restructuring within the Netherlands is also made easier as a result of the implementation. The amendments are only applicable to limited liabilities companies. In the Netherlands, this concerns B.V.'s and N.V.'s.
With this blog, we provide points of reference for the global procedure as well as a broad overview of the practical changes.
Three phases can be distinguished for a cross-border operation:
- Preparation phase
- Decision-making phase
The cross-border operation should be prepared first. This concerns inter alia drafting a proposal and explanatory notes, providing with a notice informing the parties involved (shareholders, creditors and the workers council / the employees), carrying out the required checks and publicly disclosing and announcing such operation and documents.
Important change: notice informing the parties involved
The required notice informing the parties involved stands out. The shareholders and employees now receive more information as opposed to before. Furthermore, shareholders, the workers council (or employees) and creditors hold a special position. They may submit comments concerning the cross-border operation, at the latest five working days before the resolution regarding the cross-border operation.
Small change: announcement
The announcement of a cross-border operation only needs to take place in the Government Gazette (Staatscourant). The announcement in a nationally spread newspaper, which is still required under current law, is no longer required. This reduces costs.
Important change: longer creditor opposition period
After the announcement, a creditor opposition period commences. This creditor opposition period is significantly longer as opposed to before or for an operation within the Netherlands (one month).
After the preparations have been carried out, resolutions may be taken with respect to the cross-border operation. A resolution may be taken within one month after the announcement. As such, a resolution may be taken before the end of the creditor opposition period. As a general rule, the decision is taken by the general meeting.
Decision-making by the board of management
It is also possible for the board of management to resolve upon an intra-group cross-border legal merger. Please note: this is not possible for a cross-border division or conversion.
After the decision-making has taken place and the creditor opposition period has ended, the cross-border operation needs to be implemented. In the Netherlands, this is carried out by a Dutch Civil-Law Notary. The Dutch Civil-Law Notary also provides with certificates of approval for outbound cross-border operations. The exact moment of coming into effect of the cross-border operation depends on the type of operation.
What is new, is that the Dutch Civil-Law Notary will have to asses whether the cross-border operation is aimed at abusive purposes or not. This concerns for instance criminal purposes, fraudulent purposes or the evasion or circumvention of the law. The assessment needs to be successfully carried out (with the conclusion that there are no abusive purposes), before the actual implementation may take place.
Practical changes for restructuring within the Netherlands
A few practical changes occur with the implementation of the legislative proposal from 1 September 2023. An intra-group restructuring can take place easier as a result thereof. We have set this out below.
Preceding transfer of shares for intra-group legal merger no longer required
Legal mergers within the Netherlands are simplified incase of a (indirect) sole shareholder. It often occurs that two group companies wish to merge intra-group whilst they are organised on different levels within the group. We have set out an example of such legal merger below.
From 1 September 2023, such legal merger may be carried out in a simplified manner ("simplified legal merger"). A simplified legal merger is a lot easier as opposed to the a non-simplified legal merger. This is why an intra-group transfer of shares was usually carried out prior to such legal merger, in order to achieve a structure which would allow the legal merger to qualify as a simplified legal merger. With this change, such intra-group share transfers are no longer necessary: the intra-group legal merger will qualify as a simplified legal merger.