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

Mergers & Acquisitions (3rd edition)

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 the event of a change of employer (which will not be the case in a share deal) as a result of a contractually agreed (partial) transfer of the business, all employees concerned are in principle automatically transferred to the acquiring entity with preservation of their rights under the employment contract pursuant to the Collective Bargaining Agreement No 32bis, the Belgian implementation of the European Transfers of Undertakings Directive.


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.

Bermuda Small Flag Bermuda

Transactions such as these may of course lead to a rationalisation of staff. Section 30 of Bermuda’s Employment Act 2000 provides that where any redundancy, whether the result of M&A or not, is considered the employer must, as soon as practicable –

a) inform the employee’s trade union or other representative (if any) of the following information:

  1. the existence of the relevant condition of redundancy;
  2. the reasons for the termination contemplated;
  3. the number and categories of employees likely to be affected; and
  4. the period over which such termination is likely to be carried out; and

b) consult the employee’s trade union or other representative (if any) on:

  1. the possible measures that could be taken to avert or minimise the adverse effects of such redundancy on employment; and
  2. the possible measures that could be taken to mitigate the adverse effects of any termination on the employees concerned.

Employees do not have any general consultation rights under Bermuda law unless they are “unionised”, that is to say members of a union. The procedure of consultation and/or further specific rights may vary dependent upon the particular terms of the collective bargaining agreement between the company and the union.

That said, while consultation is not required, the employer should take steps to ensure that a fair process is carried out in determining who should be made redundant and whether there is any alternative employment options within the company for the employees, which should include consulting with the employees prior to making any redundancies.

Colombia Small Flag Colombia

There is no approval, consultation or other special rights granted to employees or other stakeholders.

Croatia Small Flag Croatia

10.1 Within 5 days after the publication of the offer and before the opinion is published, the management board of the target is obliged to submit its opinion to the target’s workers’ representatives or to the employees directly, who can give their opinion on the offer within the next 3 days. If the management board of the target receives the employees’ opinion on time, it is obliged to attach it to its opinion on the offer. If the opinion on the offer or the employees’ opinion on the offer contains false or misleading information, and if the persons who have prepared the opinion or participated in its issuance knew or should have known that the information was false and/or misleading, they shall be jointly and severally liable to the shareholders for the damage caused.

10.2 As a general rule, the company’s supervisory board must contain at least one member of the workers’ representative. The workers’ representative is appointed and revoked by the employees’ council or by employees directly through free and direct elections by secret ballot.

10.3 Moreover, the Croatian Labor Act regulates the rights and obligations of the employees in case of the employer’s statutory change. As a rule, in case of company’s corporate changes in status, all employment agreements for workers who have worked for the company which changes its status are transferred to the new employer. Workers whose employment contracts are transferred as described, retain all the employment rights they have acquired until the date of the transfer of the employment agreements. The company, whose part(s) of business are transferred to a new employer (new company), is obliged to inform its workers, whose employment agreements are transferred, of their respective rights. If the employer has requested the workers council’s consent for employer’s decision on the changes in the company’s corporate status, the workers council shall respond to the employer’s request within eight days from the submission of the employer’s request. If the workers council fails to submit its respond to the employer within the deadline, the workers council is deemed to agree with the employer’s decision.

Ecuador Small Flag Ecuador

No, unless the M&A is about acquiring a part of a going concern without buying the legal entity. In this case, workers have the right to decide whether to continue or withdraw and if they decide to leave, they have the right to financial compensation equivalent to untimely dismissal, compensation that is established in the labor law.

Austria Small Flag Austria

If an intended M&A transaction entails significant changes to the organisational structure (including redundancies affecting a certain percentage of employees), the works council (provided that such works council exists) has information and consultation rights and also may issue its opinion on corporate restructuring measures and may enforce a redundancy program, but cannot hinder the transaction as such.

Article 3 of the Employment Contract Adaptation Act provides for a mandatory transfer of all existing employment contracts (including benefits) pertaining to the entire business or the operational business unit sold (e.g., asset deal) or transferred (e.g., by a merger) to another company. In a share deal the benefit plans of the legal entity whose shareholder changes will continue to apply.

Furthermore, under the Takeover Act, the bidder and the management of the target company are obliged to notify their respective works council without undue delay about the public offer. The works council does not have a blocking right.

Czech Republic Small Flag Czech Republic

In case of an asset deal in the form of the sale of an enterprise or its part, the trade unions or the employees must be informed on the intended transfer in advance.

In case of M&A transactions falling within the scope of Act on Takeover Bids, the trade unions and the employees must be informed by the bidder and the target company’s board of directors about the publication of the takeover bid, about any other available corresponding documents and about their rights to inter alia express their opinion on the bid.

British Virgin Islands Small Flag British Virgin Islands

A dissatisfied member may dissent from a merger (unless the member will continue to hold the same or similar shares after the merger) or a consolidation. A dissenting member is entitled to payment in cash for the fair value of his shares. The value of the shares is determined without reference to the effect or impact of the proposed merger (whether positive or negative).

To initiate the dissent process, the member must object in writing to the merger or consolidation before the vote on the plan. If the merger or consolidation is not approved, then of course no further action need be taken with respect to or by the dissenter. If the merger or consolidation is approved by the other members, however, the company has 20 days give notice of this fact to each objector, and to each member who did not receive notice of the meeting. Such persons have 20 days to give to the company their written election to dissent from the merger or consolidation, provided that in the case of a merger, the 20 days starts when the Plan of Merger is delivered to the member.

Upon giving notice of his election to dissent, a member ceases to have any rights of a shareholder except the right to be paid the fair value of his shares.

Within seven days of the later of the delivery of the notice of election to dissent and the effective date of the merger or consolidation, the company must make a written offer to each dissenting shareholder to purchase his shares at a specified price that the company determines to be their fair value. The company and the member then have 30 days to agree upon the price. If the company and the member fail to agree on the price within the 30 days, then the company and they must each designate an appraiser and these two appraisers designate a third. These three appraisers shall fix the fair value of the shares as of the close of business on the day before the shareholders approved the transaction without taking into account any change in value as a result of the transaction.

There is no requirement under BVI law for any consultation with employees in relation to an offer. In the limited circumstances where the company has BVI employees, the BVI Labour Code, 2010 (Labour Code) deals with continuing employment of employees in a surviving company and provides that those offered continuing employment will carry forward their service and accrued rights.

Cayman Islands Small Flag Cayman Islands

Both a statutory merger/consolidation and a squeeze-out provide for certain dissenter rights. In the statutory merger/consolidation context, dissenting shareholders are permitted (upon completion of the statutory process) to make an application to the Court for the payment of fair value for their shares. Similar considerations apply for statutory squeeze-outs; however, where there is a tender offer which is not on an all cash-basis, dissenters have no right to compel a cash alternative. For schemes of arrangement, the key challenge is achieving the high approval majorities required of each class of shareholders or creditors.

Aside from a general consideration with respect to any relevant employment contracts, there are no employee or pension-specific provisions applicable to a merger or equity acquisition; save that, in the case of a statutory merger where the surviving company is a Cayman Islands company or LLC, it assumes all contracts, obligations, claims, debts and liabilities of each of the other constituent companies, including any employment liabilities.

Additionally, the consent of each secured creditor of each constituent company to a statutory merger or consolidation is required. However, in certain circumstances, the court may grant relief from this requirement.

For a scheme of arrangement, there are no employee or pension-specific provisions applicable but, where the rights of creditors are to be affected, their consent will be required.

Employee, pension or creditor consideration will not be relevant to a tender offer or statutory squeeze-out.

France Small Flag France

In case of negotiation of the acquisition of a controlling block, the target’s works’ council (if any) must be informed and consulted ahead of signing the share purchase agreement.

In the event of a public offer, ahead of the target’s board providing its opinion on the offer, the target's works' council (if any) must be convened by the target’s CEO immediately following the filing or the announcement of any offer, to be informed and consulted in respect of the offer. Such obligation to inform and consult the target's works' council is not applicable if the target is the subject of an offer by a bidder, which, alone or in concert, already holds more than 50% of the share capital or voting rights of the target. In such a case, the target's works’ council shall only be informed about the offer. The works' council may decide on the friendly or hostile nature of the offer. In the context of the works council consultation, the council has the right (i) to invite the bidder to make a presentation to it within 1 week after the filing of the draft offer (or its announcement) and (ii) to appoint an accounting expert who shall within 3 weeks provide a report assessing the bidder's industrial and financial policy and strategic plans as well as the consequences of their implementation on the various interests at stake, employment, sites and the location of target's decision-making centers.

In the above-mentioned cases, the opinion issued by the target’s works council is not binding and cannot block the acquisition of the controlling block or the public offer, but may slow its timetable.

Finally, the law of July 31,2014, commonly named Hamon Law, has introduced an obligation to inform employees individually in the event of the sale of the majority of the share capital of a French société par actions in order to allow such employees to make an offer to acquire the relevant shares. Such obligation is applicable to companies (listed or non-listed) without a works council and with a works council but with fewer than 250 employees and falling in the category of SMEs (i.e. companies with a turnover lower than 50M€ or a total balance sheet lower than 43M€). In any case, it does not create any preemption or preferential right in favor of employees and the seller remains free to decline an offer made by any employee.

Greece Small Flag Greece

The Greek company law has not endorsed the two tier system. However the employment laws provide that employees of private companies that employ more than a specific number of 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, such information shall be made available in a timely fashion.

The opinion of the BoD in relation to the bid must be distributed to the employee representatives, who subsequently may submit and annex their reply. Similarly, there is a right to be informed 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, these 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.

Japan Small Flag Japan

In stock-transfer transactions, employees, creditors, business partners or other stakeholders do not have any statutory approval, consultation or other rights under the law. However, these stakeholders may have specific rights granted to them under relevant agreements.

On the other hand, some stakeholders may have specific approval, consultation or other rights in an asset-transfer transaction. Asset deals are often structured to include a contractual asset or business transfer component, a statutory demerger (kaisha bunkatsu) component or both. In the case of a contractual asset or business transfer, the designated contracts and other rights and obligations cannot be transferred without procuring the consent of the relevant counterparties. But, in the case of a statutory demerger, contracts and other rights and obligations specified in the agreement or plan concerning such demerger can be transferred without the necessity of procuring the consent of the relevant counterparties (although they may have specific rights under the contracts). The above notwithstanding, as part of the demerger process, the parties thereto are required by law to undertake certain statutory procedures to protect the interests of employees and creditors and to take certain measures when an employee or creditor raises an objection to the demerger.

Jersey Small Flag Jersey

There is no obligation to consult with or obtain the approval of employees. If the Takeover Code applies, there is an obligation to provide certain documents to either an employee representative or otherwise to the employees.

Mauritius Small Flag Mauritius

There is no requirement to consult with or obtain the specific approval of employees and creditors. However they may be informed of the proposed M&A.

Myanmar Small Flag Myanmar


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 has the right to object a transfer of the employment to the new employer, often referred to as the right of reservation.

Peru Small Flag Peru

In accordance with the Peruvian Corporations Law, stakeholders, such as creditors, can oppose to the execution of a merger (or any other kind of reorganization) agreement taken by the company’s organs. On the other side, employees of the target company do not have any approval or consultation right that can affect the M&A negotiation. For a transfer of shares, stakeholders do not have additional rights other than those agreed on the corresponding agreement.

Philippines Small Flag Philippines

The rights of a stakeholder will depend on their relationship with the corporation (e.g. whether they are stockholders, employees or otherwise). Generally, the right of a stakeholder is determined by contract with the corporation. In the absence of a contract, stakeholders must invoke a right conferred by law otherwise they have no specific approval, consultation or other similar rights.

For example, employees have the right to security of tenure under the Philippine Labor Code. Thus, the Philippine Supreme Court has ruled that employees of the constituent or acquired corporations should consent to being absorbed by the new corporation, otherwise their employment is deemed terminated and the acquiring corporation will be required to settle statutory benefits such as separation pay or retirement pay.

Isle of Man Small Flag Isle of Man

There are no specific obligations under Isle of Man law to consult with, or obtain approval from, employees or other stakeholders.

If applicable, the Takeover Code contains provisions relating to engagement with employee representatives and the provision of information.

If the target is a regulated business, regulatory approval may be required.

Portugal Small Flag Portugal

In share deals, no specific approval is required from employees or other stakeholders, unless the by-laws of the target company specifically attribute any such rights, which is extremely rare or even unheard of in Portugal. In the context of PTOs, however, employees’ representatives may be called by to give their opinion on the offering when the directors are reviewing the prospectus.

Specific employment related rules apply when transferring businesses as a going concern, notably by way of an asset deal, a merger or demerger.

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).

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, other participants’ (shareholders’) consent requirement 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.

South Africa Small Flag South Africa

In terms of the Takeover Regulations, there is no requirement to obtain approvals from employees or stakeholders. However, registered trade unions may bring a derivative action to protect the legal interests of the company under the laws applicable to derivative actions in the Companies Act.

Sweden Small Flag Sweden

Under Swedish law the workers’ unions have certain rights to be informed/consulted in matters that may affect their rights or employment conditions. This does not include a blocking power for the unions/employees when it comes to M&A transactions. For a standard share transfer transaction, no union consultation is required (unless it is evident that there e.g. will be redundancies in either of the involved companies as a result of the transaction) while an asset deal involving transfer of employees generally triggers the obligation to consult with the unions prior to any decision being taken. The consultation process is normally quite straightforward and not that time consuming.

In the context of a public takeover, a Swedish offeror shall inform its employees about the takeover offer and the offer document as soon as they have been made public. The Board of Directors of the target company shall inform the employees of the target company about the takeover offer, the offer document and the Board of Directors’ recommendation to the shareholders as soon as they have been made public. The same information shall also be given to employee organisations which represent employees of a Swedish offeror/target company.

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 connection with a transaction. 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.

Thailand Small Flag Thailand

Employees of the target company do not generally have any specific rights to approve of or be consulted on a potential acquisition. Only if they are to be transferred from an existing employer to a new employer (e.g. as part of an assets acquisition or business transfer) is their consent required. There are no statutory requirements for consultation with unions or work councils concerning acquisitions, disposals or mergers. However, employees of an entity whose business is discontinued on its sale have certain statutory rights as regards the buyer. Prior consultation concerning acquisitions, disposals or mergers is a common contractual requirement in collective agreements with recognized trade unions.

Shareholders will generally have approval rights, particularly where the acquisition involves an issue/sale of primary shares. A shareholder approval by a special resolution is generally required for a target company to increase its share capital and by ordinary resolutions to allot its newly issued shares.

If the acquisition is of primary shares of a listed company, a mandatory tender offer requirement may be triggered (see also paragraph 25 below) unless a ‘whitewash’ approval (or approval from the SEC which is granted in very limited circumstances) is obtained from a shareholders meeting of the target company by a special resolution.

Other stakeholder consent would depend on the existence of any change of control provision in a contract or permit of the target company which requires consent from a lender, major supplier, concessionaire or a joint venture partner before the acquisition of a certain number of shares in the target company.

UAE Small Flag UAE

No specific obligation to consult with employees on an M&A exists in the UAE.

As is the practice in most jurisdictions, on a share sale, an employee’s contract remains in place and unchanged, except where the parties agree otherwise, as there is no change to the employer. Should the employer wish to terminate the employment contract, the employer would have to follow normal procedures by serving a contractual notice period and paying contractual and statutory entitlements.

There is no statutory provision for the automatic transfer of employees on a business sale. Usually, the seller agrees to terminate employees’ employment contracts by giving the contractual notice period required, or a payment in lieu of notice, and paying their contractual and statutory entitlements. The buyer then agrees to re-hire the employees, usually on the same terms and conditions, subject to any necessary changes for group arrangements. Arrangements must also be made to cancel the immigration sponsorship of the employee by the seller and to install the buyer as the new immigration sponsor.

An employee’s employment contract cannot be terminated where he or she is on maternity or annual leave or off work for health reasons. However, an employer may terminate an employee’s employment contract if he or she is unable to resume work after 90 days of sick leave.

Only certain UAE nationals and Gulf Corporation Council nationals working in the UAE are eligible for state pensions. Other employees are instead entitled to an end of service gratuity. A private pension scheme may be offered as an alternative to an end of service gratuity provided that it is no less beneficial, but such schemes are not widely used in the UAE. The end of service gratuity payment is calculated with reference to the employee’s length of service and the last basic pay received before termination.

As there are no regulations in the UAE providing for the automatic transfer of employees pursuant to a business transfer or reorganisation, the movement of employees following an acquisition must be effected by a process of termination and re-hire. On termination of employment, the accrued entitlements – including end of service gratuity, payment in lieu of accrued untaken holiday and contractual notice – become due. In practice, these entitlements may be rolled over into the new employment with the new employing entity by way of an express agreement with each employee to be transferred unless the employee insists on being paid the accrued entitlements.

India Small Flag India

Since directors are to act in good faith in order to promote the objects of the company for the benefit also of its employees, it could be said that to that extent, the employees have a right to protect themselves against their interests being neglected. Further, where an employee is considered to be a ‘workman’ under India’s labor laws, then such an employee may have additional rights and may need to grant his approval for being transferred to a new employee in certain situations.

As far as other stakeholders are concerned, in the case of amalgamations when an application is made to the NCLT for approving the scheme of amalgamation, a notice of the scheme is to be sent to various statutory authorities such as the Central Government, the Registrar of Companies, the Income-tax authorities, in all cases; the Reserve Bank of India, the Securities and Exchange Board of India, the Competition Commission of India, and the stock exchanges, as may be applicable; and other sectoral regulators or authorities, as required by the NCLT. Thereafter, the statutory authorities may make a representation within 30 days from the date of the receipt of the said notice.

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.

United States Small Flag United States

There is no requirement that the board of a public company obtain the approval of, or otherwise consult with, employees or any other stakeholders besides shareholders. However, 28 states have adopted constituency statutes that expressly permit, but do not require, a board of directors to consider the interests of stakeholders such as employees, customers, suppliers and communities served by the corporation in determining whether or not to approve a merger.

China Small Flag China

Employees of a company generally have no approval right for an M&A transaction. Technically, the PRC Company Law provides that a target company should consult its labor union (if applicable) and obtain opinions and suggestions from its employees when making decisions on restructuring and major issues concerning its business operations or formulating major rules, regulations and policies. However, a target company is under no obligation to accept the opinions of the labor union or any employee. The consultation process is therefore usually only a formality.

Egypt Small Flag Egypt

Under Egyptian Law, employees and other stakeholders generally have no specific approvals or consultation rights in relation to an acquisition of a target company, whether or not listed.

Guernsey Small Flag Guernsey

There is no requirement to consult with or obtain the specific approval of employees but the Takeover Code (if applicable) does require that certain documents (including the offer document and announcement) are provided to an appointed employee representative (or to the employees if there is no appointed representative).

For an amalgamation under Part VI of the Guernsey Companies Law, creditors of the company must be given written notice of the proposed amalgamation and have a right of inspection of the amalgamation proposal and a right to a free copy of the amalgamation proposal upon request.

For a scheme of arrangement under Part VIII of the Guernsey Companies Law, the Court may make provision for any persons who, within such time and in such manner as the Court directs, dissent from the arrangement. It should also be noted that as part of a scheme of arrangement the target is obliged to provide notice of the proposal to the company’s creditors. The rights of these creditors and any submissions that they may make will be considered by the Court when deciding whether to sanction the scheme.

Hong Kong Small Flag Hong Kong

Please refer to the relevant Offshore Chapter.

United Kingdom Small Flag United Kingdom

Generally speaking, employees do not have approval or consultation rights in UK M&A transactions (but care should always be taken in the context of an acquisition of a target with operations in several jurisdictions). However, the treatment of employees in an acquisition of a business (as opposed to the acquisition of a company by way of a share acquisition) will give rise to certain considerations under the Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”), including certain consultation and information provision obligations. Where TUPE applies, employees of the business being acquired automatically transfer to the purchaser unless they refuse to do so. In addition, in the context of a public M&A transaction, if an employee representative has been appointed or there are pension trustees, the Code provides that they have the right to receive certain documentation relating to the takeover bid and also the right to have their written opinion on the proposed takeover bid included in the information distributed to target shareholders.

In relation to employees, bidders should also investigate whether the target company operates a defined benefit pension plan and, in particular, whether it is in deficit. It may be necessary to agree a course of action with the UK’s statutory Pensions Regulator, which could include funding, or at least guaranteeing some or all of the deficit.

A further consideration in relation to a proposed M&A transaction, is whether there is a risk of triggering any merger control thresholds which would require the prior approval of the relevant authority.

Cyprus Small Flag Cyprus

The general principle is that there must be equal treatment to all shareholders of the target company. Hence, the bidder must treat employees or other stakeholders who hold shares or have the right to acquire shares equally in terms of the benefits or terms offered.

In any event, the Safeguarding and Protection of Employees Rights in the Event of the Transfer of Undertakings, Business or Parts Thereof Law (Law 104(I)/2000) grants rights to the employees in the event of a sale or transfer of a business or part of a business. In particular, Law 104(I)/2000 grants the following right to employees in the event of a sale or transfer:-

a) The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee;

b) Provided that the transferor and transferee may agree that after the date of transfer, they shall continue to be jointly and severally liable in respect to obligations created before the transfer and which arise from a contract of employment or employment relationship in force at the time of the transfer; and

c) Following the transfer, the transferee shall continue to observe the agreed terms and conditions of any collective agreement on the same terms applicable to the transferor under that agreement, or practice, until the date of the termination, or expiry of the collective agreement, or until the entry into force, or application of another collective agreement. The existing agreed terms and conditions of employment shall be preserved for a minimum period of one year.

Furthermore, sections 198-200 of the Companies Law regulate the procedure that needs to be followed in private M&A transactions. The Companies Law provides for the approval of the proposed scheme at a general meeting of the members by at least 50% +1 of those present and entitled to vote as well as an approval from a meeting of the creditors (again 50%+1 of those present and entitled to vote) as well as obtaining the sanction of the competent Court.

In relation to a public takeover bid CySec is designated as the competent authority which regulates and sanctions/approves the procedure.

Hungary Small Flag Hungary

Shareholders’ approval and decision rights. Shareholders other than the selling shareholders may be involved in M&A transactions by way of exercising certain decision and approval rights in several different ways.

The shareholders of a private company may agree in the company’s articles of association, that the shares of the company can be transferred to a third person only with the company’s consent. Pursuant to the Civil Code, the shareholders’ meeting of the company has competence in resolving on the consent.

Also, if a shareholder wishes to transfer its share in a limited liability company to two or more separate acquirers or if it wishes to transfer only a part of its share such share needs to be divided. Such division must be approved by the shareholders’ meeting. At the shareholders’ meeting, the transferring or dividing shareholder cannot vote regarding the transfer or the division. Hence, the transfer and the division will actually be allowed or rejected by the other (non-transferring and non-dividing) shareholders.

Shareholders’ right to make a counter-offer in a public takeover bid. In a public takeover bid under the Capital Market Act, shareholders have the right to make a counter-offer and may, thus, attempt to prevent acquisition by the person who intends to acquire shares via the public takeover bid.

Involvement of employees. In Hungary, the involvement of employees is M&A transactions is rather formal and confined to information and consultation rights and employees do usually not have consent or approval rights.

Employees’ involvement in the supervisory board and the board of directors. Under the Civil Code, employees of larger companies are involved in the supervision and, in certain cases, the management of the company via employee representatives. At a company that has more than 200 full-time employees (average per year), one third of the members of the supervisory board must be appointed from the employee representatives. The supervisory board supervises the company’s management. It also opines on the draft financial report of the company before it is approved by the supreme body, and on the intended merger or transformation of the company, as the case may be. The company’s employees are involved in these competences via the members of the supervisory board who are employee representatives.

If a public company is managed by a uniform board or directors, which performs the tasks of both the management board and the supervisory board, and employees have the right to take part in the supervisory board based on the number of employees employed at the company, the board of directors and the workers’ council must agree on the participation of the employees in the board of directors. Hence, via the members of the board of directors who are employee representatives, employees may be involved in the management and supervisory competences at the company.

Ex ante information of employees in case of transformations, mergers and demergers. The Transformation Act prescribes an obligation for the company’s management to inform employees on the intended transformation, merger or demerger of the company after the resolution on the transformation, merger or demerger but still before the registration thereof by the competent court of registration. This employee notification is a precondition for the registration of the transformation, merger or demerger. However, it does not convey any consent or approval rights to employees.

Employees’ opinion on public take-over bid. In case of the acquisition of a public company via a compulsory public takeover bid under the Capital Market Act, the management board must issue and publish an opinion of the compulsory public takeover bid, to which the opinion of the employees shall also be attached. Such opinions most commonly address the operation program and the business plan submitted by the bidder. The opinions must be published to the other shareholders of the target company as well.

Qatar Small Flag Qatar

No. But the effect of any merger under Qatar law is that the merged entity is the successor in law to any contractual rights and obligations that existed in any merging entity prior to the merger, so this would apply to contracts such as employment agreements, leases, supply agreements etc.

Furthermore, the QCB may require merging financial institutions to provide certain comforts in relation to the customers of merging financial institutions. This may include, without limitation, an action plan to be provided by the financial institutions setting out the details on how to deal with customer accounts / facilities and consents. The QCB has the right to impose certain conditions, grace periods or require certain guarantees from the financial institutions before it issues a final approval.

Slovenia Small Flag Slovenia

The Worker Participation in Management Act (ZSDU) requires the employer to consult the employees in case of major ownership changes. The employer must firstly notify the employees about the planned change in ownership. Employees should then be invited to reply to the notice. The notice should be sent to the employees at least 30 days prior to the closing of the transaction, leaving them at least 15 days to reply to the notice.

In case of a public takeover, the management of the target company and the acquirer must inform the employees about the takeover intent. The employees must also be given access to the prospectus. The management of the target company must provide the employees with its opinion on the takeover offer and publish the employees’ opinion on the effects of the takeover offer on employment.

Updated: May 14, 2019