The cross-border merger process invariably begins with the preparation of the draft common terms of the cross-border merger, which is no longer viewed as a merely technical document and now assumes a central role as a key transparency tool. Alongside the draft terms, the management body of each participating company must prepare a report addressed to shareholders and employees, setting out the legal and economic grounds for the transaction, its implications, and the expected impact on the future structure and business of the companies involved. Although this report may, in certain cases, be waived, the general rule reinforces the obligation to provide adequate reasoning and prior disclosure as an essential pillar of the procedure.
One of the most significant developments is the strengthening of the right to informed participation.
Shareholders, employees’ representatives or, in their absence, the employees themselves may submit comments on the draft merger terms, thereby creating a formal “comment stage” which requires more careful planning and proactive internal risk management, particularly in transactions affecting work organisation or business continuity. Where an opinion is issued by employees’ representatives, the management body must disclose this fact and annex the opinion to the report made available to shareholders and employees.
In parallel, the audit review mechanism remains in place through a statutory auditor or an audit firm, although the regime provides for circumstances in which such intervention may be dispensed with, potentially streamlining specific transactions. The formal approval of the merger takes place by way of resolutions of the general meetings of the participating companies, which must approve the draft terms and, where applicable, the relevant amendments to the articles of association, or the draft constitutional documents in the event a new company is incorporated.
From a stakeholder protection perspective, the new regime adopts a more robust approach.
Shareholders benefit from additional remedies where they consider the cash compensation or consideration to be inadequate, including the right to apply to the courts for fair compensation within the applicable time limits.
Likewise, shareholders who voted against the draft merger terms may require the acquisition of their shares or quotas for adequate compensation, effectively establishing a genuine “exit mechanism” in the cross-border context.
As regards creditors, the regime significantly strengthens the right to oppose and to request safeguards.
Following publication of the draft merger terms, creditors who can duly demonstrate that the transaction jeopardises the satisfaction of their claims and that the safeguards offered are insufficient may apply to the court for the provision of adequate guarantees. The time limit for such action is three months, substantially extending the window for creditors’ intervention compared with traditional corporate reorganisation procedures.
However, the most decisive change lies in the legality control mechanism. Cross-border mergers are now dependent on a pre-merger certificate issued by the commercial registry authorities, which acts as an essential condition for the transaction to proceed and produce legal effects.
Such legality control is, as a rule, carried out within a maximum period of three months, which may be extended by a further three months to obtain additional information or to carry out supplementary checks.
The certificate may be refused where unremedied formal irregularities are identified or where the registry authority considers that the transaction is abusive or fraudulent, is intended to circumvent EU law or national law, or pursues unlawful purposes. In practice, this introduces a genuine anti-abuse and anti-fraud mechanism.
Finally, the regime enhances legal certainty upon completion. Once the merger has taken effect and the legal requirements have been complied with, the cross-border merger may not be declared null and void. This principle is essential to ensure stability in legal and commercial dealings and to preserve market confidence in transactions involving multiple jurisdictions and complex corporate structures.
In conclusion:
Cross-border mergers remain a key tool for group reorganisations and international expansion, but they are no longer a purely formal procedure.
The new framework requires greater documentary rigour, increased transparency, stronger protection for creditors, shareholders and employees, and effective public oversight through the pre-merger certificate.
For companies and groups operating across Europe, the prevailing rule is now to approach the transaction as a true compliance-driven process.
Belzuz Abogados, S.L.P. – Portuguese Branch is an international law firm headquartered in Madrid, with offices in Lisbon and Oporto, providing specialised legal advice to companies, investors and international groups in the structuring and implementation of corporate reorganisation transactions within the European area, including cross-border mergers.