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Court Approves Investment Banks Cross-Border Merger


In a good illustration of the numerous hurdles that must be jumped before the courts will approve a cross-border corporate merger within the European Economic Area (EEA), a judge has consented to a UK-registered investment bank becoming one with its German sister company.


Meeting the tough requirements laid down by the Companies (Cross-Border Mergers) Regulations 2007 involved close co-operation between the English and German courts and detailed analysis of the effect of the merger on stakeholders in both companies, including shareholders, employees and creditors.


Having received a certificate from a court in Frankfurt, confirming that all required pre-merger steps had been taken, the Court was satisfied that the proposal had been considered by a competent authority of another state within the EEA. The Court was also satisfied that the application to approve the merger had been made within six months of the Frankfurt court’s order.


In considering the position of stakeholders in each company, the Court noted that both of them were wholly owned subsidiaries of one parent company and there could thus be no adverse effect on shareholders. In that both companies were ‘highly solvent’, with very substantial net assets, the Court was also satisfied that any creditors would be properly protected.


The terms of employment of the companies’ staff would not change as a result of the merger. The fact that employees of the German company would, upon completion of the merger, become employees of the UK company was not something that would have any adverse impact on their interests. In the circumstances, the Court could detect no good reason why the merger should not be approved and exercised its discretion accordingly.