Belgian company law allows for cross-border merger of cooperative companies under terms and conditions governing domestic mergers thereof. This article aims therefore at identifying specific implementation measures with respect to merger operations – on both internal and cross-border levels – of cooperative companies.
As a reminder, Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies (“the CBM Directive”) provides, pursuant to Article 3.2, for optional application of its provisions to cross-border mergers involving a cooperative company, even where the latter would fall within the definition of ‘limited liability company’ subject to Council Directive 68/151/EEC of 9 March 9 1968 (the so-called First Company Law Directive).
While implementing the CBM Directive, the Belgian legislator decided to extend the application thereof to all types of company that have a legal personality and may take part in internal merger under Belgian law.
Since the latter allows the internal merger operations to include cooperative companies, both a cooperative limited liability company and a cooperative unlimited liability company may take part in cross-border merger operations under conditions governing internal mergers.
The Belgian Company Code provides for several specific rules as far as mergers of cooperative companies are concerned.
Pursuant to Article 698, paragraph 1, a Belgian cooperative company may merge by absorbing a target company, provided the partners of such absorbed company meet conditions for admission of new partners as stated within the articles of association of the absorbing – cooperative – company pursuant to Article 366 of the Company Code.
An additional condition shall be observed in case the absorbing company (or, as the case may be, the new company resulting from the merger) has the legal form of a cooperative unlimited liability company: In accordance with Article 699, paragraph 4, 2°, of the Company Code, the merger thereof is submitted for the unanimous approval of the shareholders of the target company intended to be absorbed.
In case the Belgian cooperative company acts as the target company intended to be absorbed, Article 698, paragraph 2, provides its partners with a mandatory “withdrawal right”. Organized as a minority protection measure, the latter allows each partner of the target company to resign by being bought out by the absorbing company, at any moment during the financial year and without any further requirements, as soon as the general meeting of the absorbed company is convened and provided the merger is approved thereby; since the resigning partner has the right to take part in such general meeting, he/she may vote thereat against the merger.
