On 1 September 2023, the Act on Cross-Border Conversions, Mergers and Demergers Directive (36 267) entered into force. The Act implements Directive (EU) 2019/2121, also known as the Mobility Directive.

The Act (Wet implementatie richtlijn grensoverschrijdende omzettingen, fusies en splitsingen) provides for new procedural rules for cross-border conversions and demergers and changes to the procedural rules for cross-border mergers, collectively referred to here as 'cross-border operations'. Among other things, a fraud test is introduced, and there are more guarantees for shareholders, creditors and employees. It also contains transitional legislation for cross-border operations that were already ongoing.

The Act applies only to limited liability companies, such as private (besloten vennootschappen or ‘BVs’) and public limited liability companies (naamloze vennootschappen or ‘NVs’) in the Netherlands. In addition, each limited liability company concerned must be incorporated under the laws of another member state of the EU or the European Economic Area. It should be noted that the Act only allows cross-border demergers to acquiring companies incorporated for the demergers. A cross-border demerger to an existing company is not possible.

New procedural rules
The procedural rules concern the three phases of any cross-border operation: (1) the preparatory phase; (2) the decision-making phase; (3) and the execution phase. The new rules of the Act largely correspond to the current provisions of the Dutch Civil Code for domestic mergers and demergers, but both the shareholders and the Works Council (or in the absence thereof: the employees) receive more information, and sooner: in phase 1 of the cross-border operation.

A new element is that the civil-law notary performs a fraud test prior to the execution phase. This means that if the civil-law notary establishes that a cross-border operation is being used for, briefly put, unlawful or other fraudulent purposes, the civil-law notary will not issue the so-called pre-merger certificate and will not allow the cross-border operation. Another new element is that in phase 2, after the decision on the cross-border operation, dissenting shareholders have the right to challenge the compensation included in the proposal if they do not consider it reasonable.

Bonus fact: entry into force of a provision of the Management and Supervision of Legal Entities Act
The decree on determining the date of entry into force of the Act also stipulated that a provision of the Management and Supervision of Legal Entities Act of 2021 (in Dutch: Wet bestuur en toezicht rechtspersonen or WBTR) came into effect on 1 January 2024. It pertains to the statutory rules on the absence and incapacity of supervisory board members of an NV. As it turned out, transitional provisions on this subject were inadvertently omitted form the WBTR. Consequently, a bill containing various provisions has been introduced, which stipulates that that, upon the next amendment of the articles of association, nvs must include provisions governing the absence or incapacity of supervisory board members. For more information, please see our previous newsletter on this topic.

What does it mean for you?
We have completed several successful cross-border restructuring transactions under the new provisions and would be happy to advise you on whether this is a suitable solution for your company’s future.

If there are any future changes to the provisions regarding cross-border operations, we will update this page.

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