On 1 October 2015 the revised SER Merger Code entered into force. The SER Merger Code 2015 stipulates that merging parties must provide the relevant employees’ associations notice in advance of their intention to merge, furnish relevant information, and give them opportunity to express their views on the merger in so far as it may be affect employees. Subsequently, the merging parties must give the relevant works councils an opportunity to consider the views of the employees’ associations, so that they can take these views into account when issuing their opinion. Below we will describe the most important changes of the SER Merger Code 2015 compared to the SER Merger Code 2000.
The scope of the merger code is broadened. It now also includes the public sector, non-profit sector, and professionals such as lawyers, civil law notaries, tax advisers and accountants.
In general, the new merger code applies if:
Transfer of control
A merger is defined in the merger code as the direct or indirect acquisition or transfer of the control over an enterprise or part of an enterprise, as well as the formation of a group of enterprises. For instance, under the SER Merger Code 2000, every transfer of at least 50% of the shares in a company was considered a transfer of control over this company. However, if shares without voting rights have been issued, the transfer of at least 50% of the shares in a company may not result in a transfer of control over this company. Therefore, the SER Merger Code 2015 contains a more sophisticated concept of ‘transfer of control’ over a company. In brief, transfer of control over a company will generally be considered to take place in the event of transfer of:
Furthermore, the concept of ‘transfer of control’ includes potential control. Consequently, if an irrevocable option is granted on shares or on assets and liabilities of a company, this could imply transfer of control over that company.
Hostile takeovers were exempted under the SER Merger Code 2000. However, the SER Merger Code 2015 stipulates that the bidder, the board of the target company and persons buying shares on a stock exchange with the intention to merge need to comply with the new merger code. Hostile takeover bidders need to provide the relevant employees’ associations notice in advance of their intention to merge and furnish them with information before publishing concrete information on an intended takeover. Concrete information includes the name of the target company together with a purchase price, exchange ratio for the share swap or a time path for acquiring shares in the company.
Both SER merger codes stipulate that employees’ associations must be informed about the contents of any public announcement concerning the preparation or implementation of a merger before such announcement is made. If prior notification is in conflict with regulations governing securities transactions, the employees’ associations shall nevertheless be notified of the contents of any public announcement no later than the public. Under the SER Merger Code 2000, there was no requirement for employees’ associations to keep this information confidential. The SER Merger Code 2015 extends the scope of the requirement to maintain confidentiality to information concerning public announcements. The employees’ associations must keep this information and other information regarding the preparation or implementation of a merger confidential.
The scope of the SER Merger Code is extended. It is important to take this into account when negotiating mergers and acquisitions in The Netherlands from 1 October 2015 onwards.
For an extensive briefing on the SER Merger Code 2015, please don’t hesitate to contact us.
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