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PR(02)16: The EFTA Surveillance Authority requires Norway to comply with company law directives on mergers (78/855/EEC) and divisions (82/891/EEC)

29.8.2002

The EFTA Surveillance Authority has sent a Reasoned Opinion to Norway for failing to fully comply with the Third Company Law Directive (78/855/EEC) concerning mergers of public limited liability companies and the Sixth Company Law Directive (82/891/EEC) concerning division of public limited liability companies.

One of the fundamental purposes of the Directives is to protect the rights of shareholders and creditors of merging companies or companies involved in a division within the EEA. The Directives provide that one consequence of a merger (or a division) is that shareholders of the acquired company (or the company being divided) automatically become shareholders of the acquiring company (or the recipient companies, in the case of a division).

Under the Norwegian Public Companies Act, if, in the case of a merger, the acquiring company belongs to a group, and if one or more of the companies within the group hold more than 90% of both the shares and votes at the general meeting of the acquiring company, the consideration given to the shareholders in the acquired company may be either shares in the parent company, or shares in another subsidiary in which the parent company, alone or through subsidiaries, has more than 90% of both the shares and the votes at the general meeting ( so-called “trilateral merger”). A similar rule applies in the case of division of companies (so-called “trilateral division”).

In the Authority’s view, in the light of the fundamental principle of the protection of shareholders laid down by the Directives, the Norwegian legislative provisions on “trilateral merger” and “trilateral division” do not ensure a proper protection of shareholders, in particular minority shareholders, of the acquired (or divided) company. More precisely, these operations may have the consequence that minority shareholders may be granted shares in another subsidiary of the group which may be of a more uncertain value than shares of the acquiring company itself (or the recipient companies themselves). In any case, the Authority considers it contrary to the Directives that under the Norwegian trilateral operations the shareholders of the acquired company (or the company being divided) will not become shareholders of the acquiring company (or the recipient companies in the case of a division).

The purpose of a Reasoned Opinion is to give the State in question a last chance to take corrective measures before the Authority decides whether to bring the matter before the EFTA Court.

For further information please contact Mrs. Elisabethann Wright (Legal and Executive Affairs Directorate, telephone (32)-02-286-1839).

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