374 10 Exit of Shareholders
in the nullity of the merger. The Third Company Law Directive permits Member
States to adopt such rules but restricts their use.^203
Typically, the rights of shareholders to contest merger resolutions have been
limited because of a high risk of abuse and hold-up.^204
For example, the liberal rights of shareholders to contest resolutions under German law
have enabled a small number of professional litigants (Berufskläger) to earn a living by
threatening to block mergers and other corporate transactions (section 19.10).
Where an SE has been formed by means of a merger, the merger may not be de-
clared null and void once the SE has been registered.^205 There is a similar rule for
cross-border mergers that fall within the scope of the Directive on cross-border
mergers.^206
Third, the national provisions of Member States’ laws can provide for particu-
lar appraisal rights. The appraisal remedy means that dissenting shareholders are
given the right to have the fair value of their shares determined and paid to them in
cash, provided that the shareholders follow the statutory procedure.^207
EU merger law does not require such a remedy. However, Member States are
free to adopt the appraisal remedy in the light of the Third Company Law Direc-
tive and the SE Regulation.^208
Appraisal rights can be found both in common law as well as in civil law coun-
tries. Appraisal rights typically mean the right of a shareholder to have the com-
pany redeem all shares owned by that shareholder if the shareholder did not vote
in favour of the merger. The procedure is based on company law. However, there
is normally no specific valuation method specified by statute.
In Germany, the Aktiengesetz and the Umwandlungsgesetz (the Transformation of Compa-
nies Act) give a shareholder the right to adequate cash compensation.^209
The Third Directive further provides that shareholders must be protected by rules
on the civil liability of the members of the administrative or management bodies
of the company and the independent experts for breach of duty.^210 However, the
Third Directive does not say how the shares should be valued and how exactly the
persons responsible for information about valuation in the reports should be liable
(^203) Article 22 of Directive 78/855/EEC (Third Company Law Directive).
(^204) See, for example, § 14 UmwG and § 34 UmwG.
(^205) Article 30 of Regulation 2157/2001 (SE Regulation).
(^206) Article 17 of Directive 2005/56/EC (Directive on cross-border mergers).
(^207) See Bainbridge SM, Mergers and Acquisitions. Foundation Press, New York (2003) pp
192–193.
(^208) Article 28 of Directive 78/855/EEC (Third Company Law Directive); Articles 24(2) and
25(3) of Regulation 2157/2001 (SE Regulation). See also Siems MM, SEVIC: Beyond
Cross-Border Mergers, EBOLR 2007 p 309.
(^209) See § 15(1) UmwG, § 29(1) UmwG, and § 34 UmwG.
(^210) Articles 20–21 of Directive 78/855/EEC (Third Company Law Directive).