Mergers and demergers
Special mission of the statutory auditor
For mergers and demergers, specific procedures are prescribed by the Companies Code. The merger or demerger proposal drafted by the board of directors must be filed at the commercial court at least 6 weeks before the general meeting of shareholders of each company involved.
If a company, involved in the merger / demerger, does not have a statutory auditor, it will have to appoint an auditor (member of the IBR / IRE) or an external accountant.
Responsbility of the auditor
It is the responsbility of the auditor / external accountant to report on the merger / demerger proposal as per the standard set by the IBR / IRE: Normen inzake de controle van fusie- en splistingsverrichtingen van handelsvennootschappen / Normes relatives au contrôle des opérations de fusion et de scission de sociétés commerciales. Reporting is in particular required on:
- The proposed exchange ratio between shares
- The valuation methods used
The auditor describes the valuation methods used based on which the exchange ratio has been fixed. He also examines the weight attributed to each method. The report conclusion determines whether the exchange ratio is reasonable and whether the valuation methods used are appropriate and justified. The auditor may require any information needed on all matters examined from all the companies involved in the merger / demerger.
Responsibility of the board of directors
The board of directors of each company also has to prepare a specific report to further explain and justify the merger / demerger (unless all shareholders of all companies involved agree not to require one). The merger / demerger proposal and the reports of the auditor and of the board is presented to the shareholders of each company involved in the merger / demerger. The financial statements of the 3 preceding years should also be made available to the shareholders, together with the related reports of the board of directors and of the statutory auditor, if applicable.
If the merger / demerger proposal is to be filed at the commercial court more than six months after the end of the previous financial year, and if no interim financial statements have been prepared for the first half-year, a statement of assets and liabilities (drawn up as of a date not older than three months) must be prepared and made available for each company, unless all shareholders of all companies involved agree not to require one. The merger / demerger (and related change in the articles of association / bylaws) is effective only after approval by the shareholders of each company involved, in a meeting held in front of a notary and transcribed in an official notary deed.
Auditor or external accountant report is not required
If all shareholders of all companies involved in the merger / demerger decide that no auditor / external accountant report is required, the procedure applicable to a capital increase through contribution in kind applies for the absorbing company (merger) or the demerged company(ies) where such a capital increase occurred due to the merger / demerger.