Cross-border mergers such as the one carried out recently by Ferrovial to move its headquarters to the Netherlands must have a certificate from the Mercantile Registry, which will be the body in charge of monitoring the legality of the process. This was stated by the royal decree-law in support of the impact of war and other situations of vulnerability that the Government approved last Tuesday and publishes this Thursday the Official State Gazette (BOE).
The standard transposes a European directive to regulate cross-border conversions, mergers and demergers. The draft of this law was approved by the Government on February 14, before Ferrovial announced its intention to move to the Netherlands, but the dissolution of the Spanish Cortes has ha forced the Executive to elaborate it through the omnibus decree-law of the last Council of Ministers. The European Commission has opened a disciplinary file against Spain for failing to transpose the directive before 1 January. In that text, the Executive had already stated that the mobility of companies within Europe should be promoted “to improve the functioning of the internal market”.
The regulation, in fact, facilitates and simplifies the legal work in the analysis of the structural modification operations of merchant companies in internal European and extra-European operations. However, it also introduces some limitations, allowing the Mercantile Registry to check the legality of the operation and to issue a prior certificate stating that all the required conditions have been met.
If all the required conditions are not met, the Registry will not issue the preventive certificate and will inform the company of the reasons for its decision and will offer it the possibility of correcting the defects found within a term not exceeding 30 days. If the rectification does not take place within this term, the Registry will deny the preventive certificate and the operation cannot be performed. Exceptionally, the initial period of three months will be extended for a maximum of three months if, following the documentation and information presented, the Registry has grounds for suspecting that the operation submitted is carried out for abusive or fraudulent purposes, which have by object or produce the effect of circumventing the law of the European Union or Spanish, or pursue criminal purposes.
Another important aspect of cross-border structural modification operations is that relating to publicity prior to shareholders’ resolutions, it being necessary, as envisaged by the directive, that the information that companies publish, at least one month before the participation in the shareholders’ meeting, is exhaustive and allows interested parties to evaluate the consequences of the planned operation, according to the regulation published by the BOE.
The directive also obliges the company to draw up a report for the members and workers in which the cross-border project is explained, as well as requesting another one drawn up by an independent expert in order to fix the compensation offered to the members in the event that they exercise the right of separation. The rule strengthens the right of separation, which allows shareholders who oppose the operation to transfer their shares to the company for cash as long as they vote against in the meeting, a right that will also apply to those who have property rights but not political rights.
The decree establishes material and procedural guarantees in favor of creditors who could be harmed by an operation involving a transfer of domicile of the participating companies and, therefore, could jeopardize the collection of receivables. It also establishes that the company offers guarantees to creditors who oppose a cross-border transaction.
In order to complete the merger, the company in question will also have to be in compliance with its tax obligations. Thus, the text resumes, the merger project must contain “the accreditation of being in compliance with tax and social security obligations, providing the relevant certifications, currently valid and issued by the competent body”.
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