As commercial activities intensify within the European Union and the states participating in the European Free Trade Association, legislation has introduced a long-awaited clarification, namely the applicability of the concept of cross-border mergers. Although such operations were not a common practice in Romania, their number has increased considerably in recent years, hence the need for a clearly defined legal framework.
At present, the portal of the National Trade Register Office appears to be under update with regard to cross-border mergers and does not provide a general guide to inform professionals about the obligations incumbent upon them for fulfilling the legal formalities and the documents required for registration with the trade register, as is the case for other procedures. Nevertheless, by consulting Law No. 265/2022 on the trade register and on the amendment and supplementation of other normative acts relevant to registration with the trade register, as well as Law No. 222/2023 amending and supplementing the Companies Law No. 31/1990, several essential aspects may be identified, which we will further develop below.
First, it can be noted that the transfer of jurisdiction from the courts to the Trade Register Office in the case of cross-border merger applications leads to the simplification of formalities, acceleration of procedures, and reduction of timeframes and costs, while maintaining legal certainty. In this regard, the verification of documents and information is carried out with utmost rigor through the use of the system of interconnection of registers of the Member States, the access point being the European e-Justice Portal.
As regards the duration of the procedure, no explicit timeframe is currently provided for cross-border mergers. It is impossible to comply with the general time limits applicable to other procedures, given the complexity and volume of such a file. In these circumstances, seeking specialized assistance can facilitate the process. More specifically, in addition to the shareholders or associates, the directors of the merging companies and other specialists in various fields whose involvement is essential, the participation of their legal teams can make a significant difference in terms of the time required to finalize the procedure and achieve the desired outcome. We are referring to multiple legal teams because, as a rule, the legislation of the Member States differs, and legal expertise on both sides is indispensable to ensure compliance with all applicable legal provisions and to correctly understand the concepts arising during the formalities.
Secondly, increased emphasis is placed on transparency towards all shareholders or associates and employees of the companies involved. They must be informed in a clear and comprehensible manner about the legal and economic implications of the merger, as well as its future effects. Of course, the representatives are not required to disclose sensitive information relating to the operation.
Furthermore, we refer to the “key” element of the entire cross-border merger process, which has remained and continues to be the common draft terms of merger. These must include at least the following: the legal form, business name/denomination and registered office of all companies participating in the merger; the legal form, business name/denomination and registered office of the newly established company, where applicable; the terms for the allocation of shares, equity interests or other securities representing the share capital of the acquiring company or the newly established company; the exchange ratio of shares, equity interests or other securities representing the share capital and the amount of any cash payments; the date from which the shares, equity interests or other securities representing the share capital entitle their holders to participate in profits and any special conditions affecting that right; the rights conferred by the acquiring or newly established company on holders of shares, equity interests or other securities representing the share capital that confer special rights, or the measures proposed in respect thereof; any special advantages granted to directors or managers or, as the case may be, members of the supervisory board or the directorate; information regarding the valuation of the assets and liabilities transferred to the acquiring or newly established company; the date from which the transactions of the absorbed company are considered, for accounting purposes, to belong to the acquiring or newly established company; the implications of the merger for the workforce; the date of the financial statements of the participating companies used to establish the merger conditions; where applicable, information on procedures for determining employee participation and other methods of employee involvement in the activities of the acquiring or newly established company; the price of the shares, equity interests or other securities representing the share capital in the event that shareholders exercise their right of withdrawal, as well as the email address to which withdrawal notices may be sent; and any guarantees granted to creditors, such as real or personal guarantees, in accordance with Article 251²⁴(1) of Law No. 222/2023. It is expected that the annexes to the common draft terms of merger also include the financial statements prepared for the purposes of the merger, approved and audited in accordance with the law, which may not be older than six months prior to the date of the merger project, together with the draft articles of association of the company to be established and the draft amendment deed of the articles of association of the acquiring company.
The common draft terms of merger are examined by one or more independent experts who prepare an evaluation report in an impartial and objective manner, in accordance with Government Ordinance No. 24/2011 on certain measures in the field of asset valuation, approved with amendments by Law No. 99/2013, as subsequently amended and supplemented. These experts are jointly and severally liable for any damage caused by their culpable conduct in fulfilling their legal obligations within the cross-border merger procedure.
Passing through all these legal safeguards ensures that the cross-border merger may not be annulled from the date on which it takes effect. However, resolutions of the general meetings that are contrary to the law or the articles of association may be subject to an action for annulment, which may be brought depending on the grounds of nullity.
If you wish to find out more information about cross-border mergers or other matters related to commercial law and business law, our specialists are at your disposal.
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