378 10 Exit of Shareholders
legal and economic aspects of the formation and indicating the implications for the
shareholders” as well as the share-exchange ratio, the amount of any compensa-
tion, and the terms for the allotment of shares in the SE. The report drawn up by
independent experts for each company must indicate “any particular difficulties of
valuation and state whether the proposed share-exchange ratio is fair and reason-
able, indicating the methods used to arrive at it and whether such methods are
adequate in the case in question”.
Remedies for dissenting shareholders. In addition to disclosure, a mix of reme-
dies is available to shareholders depending on the jurisdiction.
First, shareholders can vote against approval of the draft terms of formation of
the holding SE.^232
Second, the SE Regulation permits Member States to “adopt provisions de-
signed to ensure protection for minority shareholders who oppose the operation,
creditors and employees”.^233 For example, shareholders might, at least in some ju-
risdictions, contest the resolution of the general meeting authorising the transac-
tion.
Third, unlike in mergers, a shareholder can choose whether to remain share-
holder of the promoting company or to become shareholder of the holding SE:
“The shareholders of the companies promoting such an operation shall have a pe-
riod of three months in which to inform the promoting companies whether they in-
tend to contribute their shares to the formation of the holding SE.”^234
Shareholders who have contributed their securities to the formation of the SE
shall receive shares in the holding SE.^235 The holding SE shall be formed only if
the shareholders of the companies promoting the operation have assigned the
minimum proportion of shares in each company in accordance with the draft terms
of formation and if all the other conditions are fulfilled.^236
10.4.4 Divisions
Divisions are a particular form of exit. In a division, the assets and liabilities of
one company (the company being divided) are transferred to two or more compa-
nies (the recipient companies). The shareholders of the company being divided
become shareholders of one or more of the recipient companies. The company be-
ing divided ceases to exist. Alternatively, the divided company retains its remain-
ing assets and continues to exist.^237
Functional equivalents to divisions. Divisions that are divisions in the legal
sense are not as usual as mergers, and many divisions are functional equivalents to
divisions rather than divisions in the legal sense.
(^232) Article 32(6) of Regulation 2157/2001 (SE Regulation).
(^233) Article 34 of Regulation 2157/2001 (SE Regulation).
(^234) Article 33(1) of Regulation 2157/2001 (SE Regulation).
(^235) Article 33(4) of Regulation 2157/2001 (SE Regulation).
(^236) Article 33(2) of Regulation 2157/2001 (SE Regulation).
(^237) Article 17 of Directive 82/891/EEC (Sixth Company Law Directive).