REGIME OF CROSS-BORDER TRANSFORMATIONS, MERGERS AND SCISIONS

The Changes produced by the transposition of the EU Directive 2019/2121, into national law, through DL no. 114-D/2023

DL no. 114-D/2023, published in the “Diário da República” on December 5^th, which transposed the EU directive 2019/2121 of November 27^th, 2019 into the Portuguese legal system, came into force on January 4^th, 2024. The aforementioned decree amended national legislation, namely the rules and regime for cross-border transformations, mergers and divisions.

Of Cross-Border Mergers:

• The companies involved in the cross-border merger must jointly prepare a merger project that must include, among others, the elements contained in article 98 of the Portuguese Commercial Companies Code, and each of the administrations of the participating companies must prepare a report intended for its partners and workers, which sets out the legal-economic foundations of the merger, the implications for workers and the respective future activity of each of the companies. The reports describing, as well as the merger project, must be made available electronically, at least six weeks before the date of the general meeting that will decide on the merger;
• An opinion may be presented by the workers’ representative (or workers) by the date designated for the general meeting that will decide on the merger. If such an opinion is presented, the management of the participating company must make it known to the shareholders, attach it to the report and offer a reasoned response to the questions raised up to the date of the general meeting that decides on the merger;
• In addition to the opinion of the company’s supervisory body, the common project must be the subject of an opinion prepared by an Official Auditor, except in cases where all partners of the intervening companies waive its preparation;
• Once the merger has been decided by the companies involved in it, its implementation is subject to the legally established rules.
• The company resulting from the merger must, within two months from the date of definitive registration of the merger in the commercial register, pay to the partner all the consideration for the acquisition of the shareholdings offered in the common merger project;
• The partner who understands that the consideration for the acquisition of his shareholdings is not adequate has the right to ask the court, within six months from the date of the merger deliberation, for an appropriate consideration to be established;
• The partners who voted against the merger project have the right to demand, within a period of one month from the date of the merger deliberation, that the company acquires or has its shareholding acquired for fair consideration.

 

 

Of cross-border demergers:

• They now have their own regime, with the concept of cross-border demerger being introduced, as well as its scope and modalities (partial, total and by separation);
• Inclusion of new elements to be included in the demerger project and specific rules for the demerger process (identical to those established for cross-border mergers, namely report preparation, protection of corporate creditors and control of the legality of operations).

 

From Cross-Border Transformations:

• Changing the concept and scope of cross-border transformations;
• Establishment of new elements that will have to be included in the transformation project;
• Implementation of changes similar to those foreseen for the cross-border merger regime (preparation of an expert report, protection of corporate creditors, namely provision of a 3-month period for filing judicial opposition by creditors of participating companies, and control of legality).

 

Registration of cross-border operations and mergers, demergers and transformations:

• The registration of these operations is carried out by the commercial registry services, officiously, which issue a prior certificate proving compliance with the acts and formalities prior to the operation;
• Subsequently, and still through the same services, the competent authorities of the Member States involved in the operation are notified, through the EU registries interconnection system, of the registration, issuance of a prior certificate and the start of the operation taking effect, in reference to each of the companies involved.

The aforementioned changes translate into the need to reconcile the establishment of an internal market without borders, without forgetting the indispensability of social protection of the workers, creditors and partners.