Do employees/other stakeholders have any specific approval, consultation or other rights?

Mergers & Acquisitions (2nd edition)

Norway Small Flag Norway

As a point of basis, share acquisitions will not trigger any statutory approval or consultation rights for neither employees nor other stakeholders. A share acquisition in itself will normally not affect an employment contract and therefore not trigger any duties on the new shareholder(s). However, if the target is listed on a Norwegian regulated market, the STA imposes additional obligations to inform the employee in connection with a public bid for shares in the company. In addition, if the target company is bound by a collective bargaining agreement with a trade union, it may be obliged to notify the employees if a shareholder's (buyer's) ownership percentage exceeds certain thresholds. The collective bargaining agreement may also impose the target to contribute to the buyer informing the target's employee's on its plans. A target company may also have specific contractual obligations towards creditors or other stakeholders that requires consultation or approval.

With respect to statutory mergers, the merger must be notified to the NRBE after which a six weeks creditor notice period follows. During such period, creditors of the merging companies may claim their rights, and, as a point of basis, the merger will not be effectuated before the claim is settled. In addition, the merger plan and the board statement on the merger's anticipated effect on employees must be made available to the employees. For a statutory merger, the board of the merging companies must prepare a detailed statement covering the merger and its anticipated effects on employees. The employee representatives (both in listed and non-listed) merging companies will have a statutory right to receive all information and related reports and statements, and to discuss the merger with the board.

Special notification rules apply for alternative investment funds (AIFs), which (individually or jointly) acquires control of a target that fulfils certain criteria. Under these rules, the investment manager must notify and disclose the fund’s intentions with regard to the target’s future business and the likely repercussions on employees etc.

In business combinations structured as a transfer of an undertaking, both future and current employer will have certain duties to notify and consult with employees and their representatives. However, there are no requirement to obtain consent from the employees to carry out an asset sale, but pursuant to the Norwegian Working Environment Act (2005), the employee's elected representative and the employees shall, as early as possible, be presented with information concerning the transfer.

Moreover, in transfers of undertakings, the rights and obligations of the former employer ensuing the employment contract or relationship in force at the date of the transfer, shall be transferred to the new employer. The transfer in itself do not give just cause for a termination of the employment contract for the new employer. Meanwhile, an employee have the right to object a transfer of the employment to the new employer, often referred to as the right of reservation.

Myanmar Small Flag Myanmar


Greece Small Flag Greece

The Greek company law has not endorsed the two tier system. However the employments laws provide, that employees of private companies that employ more than 50 or 20 persons, as the case may be, have the right to be informed prior to the transfer of the company about the date of the transfer, its background, eventual financial, legal and social consequences, as well as the planned actions that relate to employees; equally, they are entitled to information by the acquirer in a timely fashion.

The opinion of the BoD in relation to the bid must be distributed to the employees’ representatives, who subsequently may submit and annex their reply. Similarly, a right to be informed exists in relation to the outcome of the takeover bid. If the administration of the transferred company intends to take action relating to the status of the employees, the latter have the right to participate in consultations with the managers of the company, in order to reach an agreement.

The creditors of a merging SA are entitled to financial guarantees if the financial status of the merging companies renders such guarantees necessary. Furthermore, creditors owning convertible bonds in at least one of the merging companies have a specific approval right over the merger. Equally, creditors of merging PCs can object to the merger or request to be granted sufficient securities.

Germany Small Flag Germany

If the company regularly employs more than 500 people domestically, one third of the supervisory board members must be representatives of the employees; if the company has more than 2,000 employees, one half of the members of the supervisory board must be employee representatives. These German co-determination laws are mandatory for the German Stock Corporation and the SE. However, even though the formation of a supervisory board is generally not mandatory for a German limited liability company, the co-determination legislation will also apply to GmbHs with the relevant number of employees and will require the establishment of a supervisory board. Given that, employees enjoy the same rights via representation as any other stakeholder group represented in the supervisory board.

a) Public M&A Transactions
In a takeover situation, the works council must be informed by the management board. The information must include detail on the potential purchaser and its intentions with the target regarding the future business activity of the target as well as the expected impact on the employees. The works council of the target may issue a reasoned statement to the management board on the offer. The management board is obliged to publish the works council’s statement alongside its statement on the takeover offer. Other than that, the management board does not have to consult the works council with respect to the offer.

b) Private M&A Transactions
For private M&A transactions, share and asset deals need to be differentiated.
If an acquisition is structured as a share deal, the identity of the employer will remain unchanged, and consequently also the contractual obligations and rights between employer and employees. A share transaction normally only requires the management to inform the economic committee (Wirtschaftsausschuss), or the works council if no economic committee exists, within a reasonable time period during the transaction process. Failure to properly inform the economic committee (or the works council) may result in an administrative fine of up to EUR 10,000. It does not affect the validity of the acquisition agreement, however.

For an asset deal, it is important how many assets are transferred under the agreement. If an essential part of the assets which allows the purchaser to continue the business activity is transferred, this may be recognized as a “business transfer” pursuant to section 613a of the German Civil Code. A “business transfer” triggers certain legal implications, including the automatic transfer of all employment contracts relating to the transferred business to the purchaser. The employees may object to such transfer. Similarly to a share deal, the business transfer as such is not subject to co-determination rights by the works council. However, if only a part of the original company’s assets are transferred, legally this usually constitutes an “operational change” by way of a business split up, which requires the works council to not only be informed, but also consulted. If the works council raises concerns, a reconciliation of interest must be found or a social plan established.

Belgium Small Flag Belgium

Belgian employment law requires that employees/employees’ representative are informed and consulted in relation to envisaged restructurings of a company, including in case of a merger.

In addition to this general requirement, Belgian regulation on public offers imposes specific obligations towards the employees/employees’ representatives. The board of the target and bidder are required to inform their respective employees’ representatives or their employees of the offer and provide them with a copy of the prospectus once it is made public. The board of directors of the target company must further inform the employees’ representatives or the employees about its opinion on the offer.

When the target company has a works council, the latter may hear the representatives of the bidder's management body. The representatives must provide the works council with certain information, including information on the bidder's industrial and financial policy and its strategic plans for the target company. The works council can submit its comments, if any, to the bidder’s management.

In specific sectors, an M&A transaction might require the prior approval of a regulatory authority. In particular, this will be the case for companies active in the financial services sector (such as insurance companies and financial institutions).

Some M&A transaction might also require prior clearance from the competition authorities. Whether any prior clearance is required, depends on the size of the target company and the bidder.

Vietnam Small Flag Vietnam

10.1 As a general proposition, employees and other stakeholders do not have any particular approval, consultation, or other rights in connection with M&A transactions in Vietnam, except in certain limited cases.

10.2 In the context of merger transactions, the entity which continues to exist post-merger (the Merged Company) is obliged at law to retain the employees of the entity which merges into the Merged Company and ceases to exist post-merger. In some cases, the Merged Company will be obliged to consult with relevant internal or external trade unions in relation to employment usage plans and/or related matters.

10.3 In the context of asset acquisition transactions, Vietnam law does not recognise any concept of the “transfer” of employees or similar. “Transfers” of employees can only be achieved by way of the voluntary termination of existing contracts of employment with the transferor entity and the entry into fresh contracts of employment with the transferee entity. Employees cannot be compelled to participate in such termination and re-hiring processes. The transferor entity is obliged to prepare an employment usage plan and obtain the opinion of relevant internal or external trade unions in relation to it.

Switzerland Small Flag Switzerland

Swiss labor law and regulation are very liberal compared to other European jurisdictions. In general, there is no requirement to inform, consult with or seek consent from the labor force or labor unions in connection with M&A transactions. Certain exceptions apply in relation to asset deals, or if a mass dismissal or similar measures are contemplated. In case of a statutory merger, the employees' representatives of the companies must be informed or, in case measures, such as (constructive) dismissals, were contemplated, consulted prior to the merger being approved by the general meeting of shareholders. This requirement can typically be satisfied between signing and closing of a transaction.

Russia Small Flag Russia

Participants (shareholders) of a non-public company have pre-emptive rights to buy interest (shares) offered for sale to a third party. This right is statutory for limited liability companies and optional for non-public joint-stock companies. A company’s charter may contain further details and requirements for the procedure, or even a pre-emptive right of the company itself to buy out the interest (shares).

Public joint-stock companies are not allowed to provide first refusal rights to any parties, except for the right of shareholders and holders of the company’s securities’ to buy additional shares in certain cases. However, a party which acquired more than 30 or 50 or 75% of shares in a public company shall make to other shareholders a mandatory offer to sell such other shareholders’ shares at the price being the average stock exchange trading price for the six months preceding the offer, or if shares have been traded for less than six months – at the price determined by a valuer.

In the event of a merger or another corporate reorganisation, minority participants of a limited liability company can veto relevant resolutions. In a situation with a joint stock company, shareholders who voted against a resolution on reorganisation or did not participate in the voting are entitled to require purchase of their stakes by the company.

Usually, employees have no say in M&A matters.

Romania Small Flag Romania

Employees are informed or consulted about important decisions concerning major changes in the labor conditions. Employees have a say (e.g. veto right) only if such right is set out in the articles of association or collective labour agreement (which is rare).

Qatar Small Flag Qatar


Updated: February 14, 2018