On the 9th of August the German government has passed the draft of a second law on the modification of the Transformation Act. In future it will be easier for German public limited companies to merge with companies from other countries in the EU. But also in the opposite direction mergers by foreign companies with German companies are facilitated by the new law.
“In particular small and medium-sized companies will benefit from the new legislation. For them it will be much easier to co-operate beyond national frontiers and to carry out reorganizations”, said Brigitte Zypries, Federal Minister for Justice. In future a German GmbH will be able to merge without problems with a French Société à responsabilité limitée (S.a.r.l.). And it will be also just that easy for a British Private Company Limited by Shares (Ltd.) to merge into a German public limited company. To this end the German Transformation Act will be extended by some amendments which are necessary in order to give legal security to these transnational processes.
Among other things, for such a transnational merger there have to be made available a joint merger plan, a merger report and a merger audit, and special regulations on the protection of minority shareholders and creditors must be observed as well. If these preconditions are met by a German company, it can apply for a so-called merger certificate with the competent court of record. In order for the merger to be registered abroad this certificate just has to be presented.
What this new draft does is casting those parts of the 2005/56/EG European Directive on the merger of public limited companies from different member states which relate to company law into German legislation already now, although the deadline for the implementation into national law is the end of 2007. Furthermore the draft is to introduce additional facilitations for reorganizations within Germany. Although the Transformation Act being in force since 1995 has proved a success in practice, some modifications had to be introduced in order to also further facilitate reorganizations on a national scale. The draft on a modification of the Transformation Act is available online. 