Protection of shareholders in cross-border mergers: the new harmonized rules

Abstract

This article aims at analyzing the new harmonized rules for the protection of shareholders in cross-border mergers. The new Art. 126 a of Directive 2019/2121 introduced for the first time harmonized provisions on the protection of shareholders in cross-border mergers. After a brief discussion of the previous regime, the rights of the new harmonized legal framework of shareholders’ protection under Art. 126 a of Directive 2019/2121 are scrutinized: the right of dissenting minority shareholders to dispose of their shares for adequate cash compensation (exit right), the right to claim additional cash compensation in case of an inadequate initial cash compensation and the right to challenge the share exchange ratio and to claim a cash payment. The minimum harmonization nature of the protection of shareholders in cross-border mergers is also scrutinized. Additionally, this article discusses the status of national law mechanisms for the protection of shareholders after the adoption of new Art. 126 a of Directive 2019/2121. Another interesting issue is the right balance between the effective protection of shareholders and the facilitation of the process of cross-border mergers. There are also some interesting questions for consideration. A few concluding remarks are deduced.