Cross-Border Mergers In Slovenia

Implementation of the Directive 2005/56/EC on cross-border mergers has for the first time enabled Slovenian companies to merge with companies from other member states. But Slovenian courts have little practical experience with cross-border mergers. And the complex interaction of the relatively newly harmonised EC legislation and the older local rules requires a sound knowledge of both regimes. It is particularly important to know how the local rules are applied in practice.

Prerequisites for cross-border mergers

Pursuant to the Slovenian Companies Act (Zakon o gospodarskih drubah; ZGD-1), two or more joint stock or limited liability companies may merge by acquisition (pri-pojitev), ie, an existing company (the acquiring company) takes over all assets and liabilities of one or more transferring companies, or by formation of a new company (spojitev), where the acquiring company is only established in the process of the merger. The transferring companies in each case cease to exist upon the effectiveness of the merger without being liquidated. The shareholders of the transferring companies are compensated with shares in the acquiring company. These principles also apply to cross-border mergers.

In Slovenia, Directive 2005/56/EC has been implemented in the Companies Act as well as in the Slovenian Act Regulating Employees Participation in Decision-Making in Cross-Border Mergers of Limited Liability Companies ( (Zakon o soodločanju delavcev pri čezmejnih zdruitvah kapitalskih drub; ZSDČZKD), regulating employees' participation rights. Corporations from other member states can participate in a cross-border merger if they (i) are mentioned in Article 1 of EC Directive 68/151, (eg, a German AG, GmbH, KGaA) or (ii) are separate legal entities with limited shareholder liability and comply with the relevant national laws intended to protect the interests of its members and third persons. In addition, eligible candidates must have their registered office, central administration or a branch, or exercise their main activity in another member state.

Merger documentation

As a first step, the managements of the participating companies must conclude a merger contract. In practice, one (multi-language) document is drawn-up, which covers the legal requirements of all participating jurisdictions in separate sections. This enables each competent authority to "tick boxes" when assessing the merger under the local law requirements. However, depending on the...