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1 This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via at: Thank You! 1

2 Innovative New Ways to Achieve a Merger in Europe 2

3 Speakers Marie Griffin, General Counsel Chartis Europe Limited (Moderator) Maura McLaughlin, Partner Arthur Cox, Lex Mundi member firm for Ireland Jonathan Sheehan, Partner Arthur Cox, Lex Mundi member firm for Ireland

4 I. Introduction to Webinar Series and Topic 4

5 Program Format I. Introduction II. The EU Cross-Border Mergers Directive III. Types of Cross-Border Merger, Procedures and Effects IV. The European Company Societas Europaea (SE) V. Case Studies VI. Questions 5

6 II. The EU Cross-Border Mergers Directive 6

7 Overview Directive 2005/56/EC on cross-border mergers of limited liability companies implementation deadline 15 December 2007 A cross-border merger is a merger involving at least two companies governed by the laws of different Member States Prior to implementation, the concept of merger was not universally recognised in Europe in particular, it represented a new concept in the common law jurisdictions of Ireland and the UK 7

8 III. Types of Cross-Border Merger, Procedures and Effects 8

9 A. Types of Cross-Border Mergers (I) Merger by Absorption: An operation in which, on being dissolved and without going into liquidation, a company transfers all of its assets and liabilities to a company that is the holder of all the shares or other securities representing the capital of the first-mentioned company Parent (Successor) Assets + Liabilities 100% Transferor 9

10 A. Types of Cross-Border Mergers (II) Merger by Acquisition: An operation in which an existing company acquires all the assets and liabilities of one or more other companies that are dissolved without going into liquidation in exchange for the issue to the member(s) of the transferor company/ies, of securities or shares in the successor company with or without any cash payment (not exceeding 10% of the nominal value of the shares/securities issued) Shareholders Transferor Securities [and cash] Successor Asset + Liabilities 10

11 A. Types of Cross-Border Mergers (III) Merger by Formation of a New Company: An operation in which two or more companies (on being dissolved without going into liquidation) transfer all their assets and liabilities to a company that they form in exchange for the issue to their members of securities or shares representing the capital of that new company, with or without any cash payment (not exceeding 10% of the nominal value of the shares/securities issued) Shareholders Transferor Assets + Liabilities Securities [and cash] Successor Shareholders Transferor Assets + Liabilities 11

12 B. Procedure to effect a Cross-Border Merger 1. Prepare Common Draft Terms, Directors Explanatory Report and (if required) Expert s Report 2. Publication of Common Draft Terms 3. Make Directors Explanatory Report available for inspection by members and employee representatives/employees for one month prior to shareholder approval 4. Shareholder Approval of Merger 5. Pre-merger Certificate in Jurisdictions of Transferor Companies 6. Scrutiny of Legality of Merger in Jurisdiction of Successor Company 7. Effective Date of Merger 8. Deletion of Registration of Transferor Companies 12

13 C. Effects of a Cross-Border Merger: General Article 14 - on effective date: Assets and liabilities of transferor companies transfer to successor company In case of merger by acquisition/formation of new company, shareholders in transferor companies become shareholders in successor company Transferor companies are dissolved 13

14 D. Company and Contract Law Aspects Legal proceedings, contracts of employment and other contracts, agreements or instruments continue as if successor company substituted for transferor company However, provisions and formalities of national law must be complied with (e.g. to perfect title to property transferred by merger, etc) 14

15 E. Tax Treatment of Cross-Border Merger Should be broadly tax neutral (subject to conditions) Generally no taxable disposal provided successor maintains a branch / PE in jurisdiction of transferor Tax Mergers Directive not applicable to stamp duty or VAT However No Irish stamp duty as transfer by operation by law CBM not a supply for VAT purposes 15

16 E. Tax Treatment of Cross-Border Merger contd. May facilitate cross-border loss relief claims Foggia Sociedade Gestora de Participações Sociais SA (ECJ Case C-126/10) Requirement for valid commercial reasons 16

17 F. Employment Law Considerations Employee participation safeguarded Article 16: rules concerning employee participation in jurisdiction where successor company has registered office will determine requirement for employee participation Transfer of Undertakings (TUPE) implementing measures may also be applicable 17

18 IV. The European Company Societas Europaea (SE) 18

19 A. Background European Public Limited Liability Company - Societas Europaea (SE) European law entity Council Regulation (EC) No. 2157/2001 and Directive 2001/86/EC Single legal and corporate framework for companies operating in more than one EU/EEA Member State Option to combine potential by means of mergers 19

20 B. Ways to create an SE Merger Creation of holding company Creation of subsidiary Transformation 20

21 B. Ways to create an SE contd. Key: Presence in different EU States Generally subject to laws applying to a public limited company in home state Managed by single tier administrative board or twotier supervisory board and management board (civil code / common law hybrid) Creation by merger: merger of two or more public limited companies from different EU States Employee participation provisions 21

22 C. Flexibility Moving Registered Office / Reincorporation Key advantages: SE can move registered office between EU States without winding up Deemed to be incorporated in new home state as same legal entity New corporate migration structure 22

23 V. Case Studies 23

24 A. Cross-Border Mergers Upwards of 25 CBMs involving Irish companies since May 2008 and growing Rationale in recent cases: Streamline corporate structure Transfer contracts without counterparty consent and individual assignment/novation Dissolution without liquidation CBM may not trigger event of default under borrowing arrangements Cross-border utilisation of losses 24

25 A. Cross-Border Mergers cont. New Possibilities Multiple company mergers Public takeover by way of cross-border merger 25

26 B. Creation and Corporate Migration of SEs Flexible migration structure within the EU Change in tax residence and corporate continuation Case Study: The Netherlands to Ireland Rationale Steps Effect 26

27 Case Study: The Netherlands to Ireland Public Shareholders Dutch NV Public Shareholders 2 1 Irish PLC 1. Creation of Irish PLC 2. Merger of Irish PLC with Dutch NV to create Dutch SE Dutch SE 27

28 Case Study: The Netherlands to Ireland Public Shareholders 3. Move registered office and head office/central management and control to Ireland Irish SE 28

29 VI. Questions 29

30 Thank you for attending another presentation from ACC s Desktop Learning Webcasts Please be sure to complete the evaluation form for this program as your comments and ideas are helpful in planning future programs. If you have questions about this or future webcasts, please contact ACC at webcast@acc.com This and other ACC webcasts have been recorded and are available, for one year after the presentation date, as archived webcasts at

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