Embed Size (px)
Citation preview
The European Company-A corporate lawyer‘s perspective ?
SEEUROPE Network, 12 April 2005Dr. Thomas Bücker
- 2 -
Overview of Contents
Benefits of the SE - An Overview
Early Cases in Practice
Initial Advisory Experiences
Problem Areas
Alternative Structuring Possibilities
Useful Options
- 3 -
Benefits of the SE - The „Classics“
Cross border mobility (transfer of the registered offices, cross border merger to form an SE, cross border contributions into an SE)
Flexibility with regard to corporate governance (one tier or two tier coporate governance, co-determination as a „subject for negotiation“)
Flexibility with regard to the applicable legal system („jurisdiction-shopping“)
Possibilities of streamlining with regard to group reporting and management structures
Genuine European legal form in terms of corporate identity, business culture, customer focus, market perception and goodwill
Increased competitveness vis-a-vis major corporations from the USA and Asia
Benefits of the SE – Early Cases in Practice and Motives
- 5 -
Benefits of the SE – First Cases in Practice and Motives
Case Study 1: Conversion of Bauholding Strabag AG, Linz, Registration of the SE in the commercial register on 12 October 2004
Motives:
Creation of a European identity
Simplification of cross border mergers, transfers of registered offices etc.
Cost reductions as a result of a clear and streamlined company structure
Facilitation of pan-European activties
Promotion of economic effiency and competitiveness
- 6 -
Benefits of the SE – Early Cases in Practice and Motives
Case Study 2: Conversion of the listed Elcoteq Network Corporation, Lohja, Finnland
Conversion report of the management board of 8 October 2004
At present: Formation of a special negotiating body
Motives:
Implementation of a strategy of internationalisation
Improved competitiveness
Pan-European identity
Opportunity for reorganisation within the group
Possibility of transferring registered offices
- 7 -
Benefits of the SE - Early Cases in Practice and Motives
Case Study 3: Formation of Brenner Basistunnel SE, Innsbruck, as a result of the merger of two public limited-liability companies
Registration in the commercial register was effected on 17 December 2004
Motives:
Italien/Austrian Agreement on the Basistunnel project stipulated SE as the legal form
Showcase project for European transport policy
Cross border joint venture „par excellence“
Solution to the question of „national appearances“
Peculiarity: Alternating seats
- 8 -
Benefits of the SE - Early Cases in Practice and Motives
Case Study 4: Formation of Nordea Bank SE, upstream merger of three national credit institutions (Denmark, Norway, Finland) into the Swedish parent company
Negotiations with the Commission concerning regulatory issues are currently still in progress
Motives:
Formation of a single „Nordic“ commercial bank
Simplification of the regulatory framework (hitherto 4 different national regimes within the group)
Uniform financial supervision for the entire group
Avoidance of turnover tax on internal group transactions
- 9 -
Benefits of the SE – Initial Advisory Experiences
- 10 -
Benefits of the SE - Initial Advisory Experiences Example 1: Cross border upstream merger of several
European companies into a joint holding company
Motives
Immediate access to the cash flows of the subsidiaries
Avoidance of tax on cross border dividends
Significant Obstacles
German co-determination
„Pan-European“ liability of the members of the administrative board (e.g. local provisions in the areas of the environment, employment security, social insurance)
Legal uncertainity in the UK (registration procedure, creditor protection)
Status: „on hold“ for the time being
- 11 -
Benefits of the SE - Initial Advisory Experiences
Example 2: Upstream merger of the subsidiaries and a transfer of the registered offices of the European interim holding company
Motives
More favourable double taxation treaty with the State in which the Japanese group holding company has its registered offices
Simplification of the financing of the group (central treasury)
Significant obstacles
Time consuming procedure
Conversion Merger Transfer of registered offices
Status: still at the review stage
Problems Areas with Respect to the Utilisation of the SE
- 13 -
Problem Areas with respect to the Utilisation of the SE
German co-determination
a „red rag“ for foreign partners, e.g. those from the UK
Complex, possibly time consuming formation procedure
Tends to prevent formations in the absence of „solid“ economic reasons, in particular in the field of listed companies
Minority rights (especially offer for compensation)
Make cross border combinations difficult in the case of listed companies
Transaction risks (particularly shareholder actions)
Complicates measures in the case of listed companies
And of course: taxation !
Alternative Structuring Possibilities
- 15 -
Alternative Structuring Possibilities
Merger Directive
Facilitates cross border mergers without a conversion into an SE
Directive on the transfer of registered offices
Facilitiates the transfer of registered offices without a conversion into an SE
ECJ case law in Centros, Überseering, Inspire Art
Already faciliates cross border mobility and „jurisdiction shopping“ to a certain degree
Useful Options
- 17 -
Benefits of the SE – Useful Options
Example 1: Cross border joint venture companies
Advantages
Cross border (European) profile generallly positive as regards market perception, company culture, recruitment
Reduction of „flag issues“
Mobility (e.g. in the case of the end of the cooperation, a change in control)
Particularly suitable for combination of state owned businesses
Potential use cases: EADS, Siemens Fujitsu, Scandlines
Way of formation: Joint subsidiary SE pursuant to Art. 2 para. 3 SE Regulation
- 18 -
Benefits of the SE – Useful Options
Example 2: Conversion into an SE and transfer of the registered offices
Potential Advantages
Tax treatment
Regulatory advantages
Soft factors (e.g. relevant „community“, recruitment of management)
Escape from co-determination?
Potential use cases: Enterprises in the financial sector
Way of formation: conversion in accordance with Art. 2 para. 4 SE Regulation and transfer of registered offices in accordance with Art. 8 SE Regulation
- 19 -
Benefits of the SE – Useful Options
Example 3: European holding companies for foreign groups of companies
Europe wide uniform market perception
More streamlined (and simpler) group structure
One tier board system with „governers“ bound by instructions
Mobility in the event of a necessary transfer of the registered offices
Reorganisations in the group are easier
Implementation simple, because
generally no opposing minorities/persons bringing an action for avoidance
numerous formalities can be waived
often no co-determination
- 20 -
Benefits of the SE – Useful Options
Use Case 4: Medium sized enterprises
Internationalisation und stramlining of market perception
More streamlined (and simpler) group structure
One tier board system with a strong CEO in the holding company and „governors“ bound by instructions in the subsidiaries
Implementation less problematic, because
generally no opposing minorities/persons bringing an action for avoidance
numerous formalities can be waived
co-determination less often
more flexible negotiations with special negotiating body are conceivable
- 21 -
Benefits of the SE – Useful Options
Use Case 5: Cross border combinations of listed enterprises as a realistic application?
Hoechst/Rhône-Poulenc
Royal Dutch/Shell
Advantages of the SE over conventional combination structures
Supranational legal form?
However: national registered office, shaped by national laws
Comprehensive legal integration
Streamlining of Corporate Governance
Streamlining of shareholder groups
Avoidance of „assymetrical“ holding structures
- 22 -
Rhône-Poulenc S.A.
Rhodia
Hoechst AG
Pharma(HMR)
AgrEvo
HR Vet
ChemicalAsset
Clariant
Schering
Market capitalisation: FF 81 billion
Pharma
SVA
68%
45%
Market capitalisation : FF 124 billion
60% 40%
Hoechst Rhône-Poulenc - Initial Structure
- 23 -
Hoechst Rhône-Poulenc - Transaction Structure
Rhône-PoulencShareholders
HoechstShareholders
Hoechst AG
Rhône-Poulenc S.A.
Takeover Offer
Contributionin KindCapital Increase
(in future Aventis, Strasbourg)
- 24 -
Hoechst Rhône-Poulenc - Final Structure
formerRhône-Poulenc
shareholders
formerHoechst
shareholders
former Hoechst AG(Germany)Subsidiary
Aventis(France)
Subsidiary Subsidiary Subsidiary
Subsidiary Subsidiary
- 25 -
Shareholders Shareholders
Hoechst AG
Commercial Register Auditors Commercial Regsiter
Rhône-Poulenc S.A.
cash offerfor contradicting
shareholdersapproval
cash offerfor contradicting
shareholdersapproval
draft terms of merger(including exchange ratio)
negotiation of participation rights
lega
l clea
ranc
e
legal
clearance
audit a
nd
report
Hoechst Rhône-Poulenc – Alternative Structure SE
- 26 -
Shareholders
Aventis SE
former Hoechst shareholders former Rhône-Poulenc shareholders
Hoechst Rhône-Poulenc – Alternative Structure SE
- 27 -
Royal Dutch/Shell - Initial Structure
Dual Listed Company, virtual integration as a result of „Adjustment Agreement“
Royal Dutch(Netherlands)
AdjustmentAgreement
Joint Subsidiary
Companies
Shell Transport and Trading (UK)
60% 40%
- 28 -
Royal Dutch/Shell – Future Structure
Joint holding Company (NewCo), UK legal form (plc.) but actual headquaters and tax residency are in the Netherlands
Implementation
Takeover offer by NewCo for Royal Dutch
UK scheme of arrangement in respect of Shell
Royal Dutch und Shell become subsidiaries of NewCo
Possible squeeze-out of the remaining Royal Dutch shareholders
- 29 -
Royal Dutch/Shell – Future Structure
RD Shareholders Shell Shareholders
Newco
RD Shell
Subsidiaries
“A“ Shares 60 % “B“ Shares
40 %
60 % 40 %
- 30 -
Royal Dutch/Shell – Alternative Structure SE
Advantages
Full integration of the enterprises involved
Streamlined Management
No inefficencies as a result of the holding structure
No squeeze-out necessary after the takeover
But:
Complex, time consuming merger process
Negotiations with the emplyees necessary, possible co-determination in accordance with the Dutch model
Desired divergence between the registered office and the actual adminsitrative office not possible (Art. 7 SE Regulation)
- 31 -
Summary in regard to Major Cross Border Mergers
Requirements
Acceptance of co-determination
Possibility of swift negotiations with employees‘ representatives
High level of acceptance among the shareholders (due to the costs of a settlement offer)
Controllable shareholders
„Tolerance“ as regards timetable
Agreement on the country in which the registered offices shall be
National registration procedure„tried and tested as regards mergers“
„Pan-European impetus“
- 32 -
Dr. Thomas Bücker
Freshfields Bruckhaus Deringer
Taunusanlage 11
60329 Frankfurt am Main
Office: +49 69 273080
Mobile: + 49 172 6769886
email: [email protected]
- 33 -
Appendix
Timetable for a Merger into an SE
- 34 -
Timetable (Appoximated Values with „Potential Savings“)
0 1 2 3 4 5 6 7 8 9 101112131415161718192021
Letter of Intent, Business Combination Agreement
Valuation of the merging entities
Preparation of draft terms of merger and report
Publication of draft terms of merger
Auditing of draft terms of merger (including exchange ratio)
Formation of special negotiating body
Negotiations with special negotiating body
Calling of the general meetings
Appproval of the general meetings
Step 1 - Review
Step 2 - Clearance
Step 3 - Review
Step 4 - Clearance
Registration of the SE
Months
![Markus Bücker - AISTHESIS VERLAG · Begriff der Geschichte, die Härtling sicher gekannt haben wird: „Der Historis-mus gipfelt von rechtswegen in der Universalgeschichte. […]](https://img.pdfslide.net/doc/110x75/5d604d3b88c993af1e8bdc68/markus-buecker-aisthesis-begriff-der-geschichte-die-haertling-sicher-gekannt.jpg)
