250 5 Equity and Shareholders’ Capital
formed by means of a merger,^563 and in cross-border mergers.^564 For example, the
Directive on cross-border mergers requires a pre-merger certificate “conclusively
attesting to the proper completion of the pre-merger acts and formalities”^565 and
scrutiny of the legality of the cross-border merger as regards that part of the pro-
cedure which concerns the completion of the cross-border merger.^566
The usefulness of information provided by such intermediaries can depend on
their personal incentives. For example, members of the board will owe duties
(such as fiduciary duties or a duty of care) to the company and sometimes even to
its shareholders. However, the board is likely to support a merger plan that it has
just approved, the board will not employ an investment bank to give a fairness
opinion unless the opinion will be favourable, and it can be difficult for sharehold-
ers to sue board members for breach of duty.
Whether the information is useful can therefore depend on the quality of regu-
lation.
General meeting. Unless the merger is the merger of a wholly-owned or almost
wholly-owned company with its parent company,^567 the merger will be decided on
by the general meeting. Shareholders will thus have a veto right. The vote neces-
sary to accomplish a merger will vary depending on the business form of the com-
pany, the governing law, and the company’s statutes (articles of association).^568
Company laws provide for a majority vote. The articles of association can re-
quire a larger majority (a qualified majority). Where there is more than one class
of shares, the decision concerning a merger shall be subject to a separate vote by
at least each class of shareholders whose rights are affected by the transaction.^569
The merger can often require decisions on the amendment of articles of asso-
ciation, the issuing of shares, the increase of share capital, and the removal and
appointment of board members.^570 The decision must cover at least the approval of
the draft terms of merger and any alterations to the articles of association necessi-
tated by the merger.^571 Those decisions can require a qualified majority.
Remedies of dissenting shareholders. If the merger is approved by the required
majority, the merger process will continue. As a rule, dissenting shareholders who
lose the vote cannot prevent the merger. However, depending on the governing
law, dissenting shareholders may have access to various kinds of remedies.
Shareholders could, in principle, have a right to contest the resolution. The ex-
istence of such rights would increase the exposure of the participating companies
to legal risk, because – as was the case in Germany – there could be a high tempta-
(^563) Articles 25–26 of the SE Regulation.
(^564) Recital 7 of Directive 2005/56/EC (Directive on cross-border mergers).
(^565) Article 10(2) of Directive 2005/56/EC (Directive on cross-border mergers).
(^566) Article 11(1) of Directive 2005/56/EC (Directive on cross-border mergers).
(^567) Articles 8 and 24–28 of Directive 78/855/EEC (Third Company Law Directive).
(^568) Articles 7 and 23(3) of Directive 78/855/EEC (Third Company Law Directive); Article
9 of Directive 2005/56/EC (Directive on cross-border mergers); Article 23 of Regulation
2157/2001 (SE Regulation).
(^569) Article 7(3) of Directive 78/855/EEC (Third Company Law Directive).
(^570) Article 7(3) of Directive 78/855/EEC (Third Company Law Directive).
(^571) Article 7(3) of Directive 78/855/EEC (Third Company Law Directive).