The Council of Ministers recently approved a series of measures in Royal Decree-Law 5-2023 of 28 June, including a new regulation on the structural modifications of commercial companies. This regulation transposes the so-called Mobility Directive (Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019), which amends Directive (EU) 2017/1132 as regards cross-border transformations, mergers and divisions. This establishes a legal framework harmonised with the European Union to improve transparency in this type of transaction.
The new regulation modifies many aspects of the structural modification regime:
- Repeals Law 3/2009 in its entirety
- Adapting cross-border structural changes to the Mobility Directive
- It creates a new regime applicable to both internal and cross-border structural changes.
Documents required to address any structural modifications
The aim of this Royal Decree-Law is to regulate both internal and cross-border (intra- and extra-European) structural modifications of commercial companies. These structural modifications cover transformation, merger, spin-off and global transfer of assets and liabilities. Each of these cases has a specific procedure. However, they now also require additional supplementary documentation:
- Structural modification project. It must be drawn up, following the instructions in Article 4 of the new regulation, by the director of the company making the structural modification.
- Report of the administrative body. This must be drawn up by the administrator(s) and sent to the shareholders and employees. It details the legal and economic aspects of the structural modification and the consequences for the employees, for the future activity of the company and its creditors.
- Independent expert’s report. At the request of the directors, an independent expert shall examine the draft structural modification and draw up a report for the shareholders. He shall assess the exchange ratio and the compensation offered. This report shall not be necessary if it is agreed by all the shareholders with voting rights or if it is provided for in the specific rules governing each structural alteration. It shall therefore be optional in the case of internal transformations and internal global transfers of assets and liabilities.
Protection of shareholders and creditors in structural changes
The protection of shareholders and creditors is provided for in all structural modification operations:
- Protection of members. The former right of separation is replaced by a right of disposal. This may be exercised by shareholders who have voted against the project or are holders of shares or holdings without voting rights. It will apply in three cases:
- Internal transformations.
- Mergers by absorption of a 90% owned company when the directors’ and experts’ reports on the merger plan are not drawn up.
- Cross-border transactions where they will be subject to a foreign law. .
In addition, if the shareholder considers that the cash compensation offered by the company has not been adequately fixed, he has the right to claim compensation within two months.
- Protection of creditors. The former right of opposition is replaced by the possibility of claiming the modification or extension of the measures with the intervention of the Commercial Registrar and independent expert and, where appropriate, the Commercial Court.
When it comes into force
The new rule came into force on 29 July 2023 and applies to projects that the companies involved have not approved prior to this date. The question arises as to whether the rule refers to projects formulated and approved by the boards. We will keep an eye on the application of the rule in the coming weeks.