England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

		The Rolls Building 7 Rolls Buildings London, EC4A 1NL
		6th September 2013

MR. JUSTICE BIRSS:

1. This is an application for approval of a cross border merger arrangement under The Companies (Cross Border Mergers) Regulations 2007.
2. I am satisfied that the evidence before me means that the preliminary steps which need to be fulfilled as the pre-merger requirements have been complied with. The relevant rule which I need to apply is regulation 16 of The Companies (Cross Border Mergers) Regulations 2007. That provides:

"(1) The court may, on the joint application of all the merging companies, make an order approving the completion of the cross-border merger for the purposes of Article 11 of the Directive (scrutiny of completion of merger) if —

(a) the transferee company is a UK company;"

I interpolate that is the case in this case

"(b) an order has been made under regulation 6 (court approval of pre-merger requirements) in relation to each UK merging company;"

I am satisfied that this has taken place in this case. A pre-merger certificate in relation to the transferee company, which is Nomura International PLC, was granted by Registrar Barber on 23rd August 2013.

"(c) an order has been made by a competent authority of another EEA State for the purposes of Article 10.2 of the Directive (issue of pre-merger certificate) in relation to each merging company which is an EEA company;"

I am satisfied that that has taken place. The merging company in question in this case is Nomura Bank Deutschland GmbH and I have a certificate from the Frankfurt local court dated 3rd September 2013 in evidence. This certificate states that it is a pre-merger certificate within the meaning of the Merger Directive. Although it does not condescend to any further detail, I am satisfied that that means it must be a pre-merger certificate as referred to by Article 10 of the relevant Directive 2005/56 EC of the European Parliament and of the Council, of 26th October 2005, on Cross-border Mergers of Limited Liability Companies.

"(d) the application is made to the court on a date not more than 6 months after the making of any order referred to in sub-paragraph (b) or (c); "

The date of the certificate in Frankfurt is 3rd September and this hearing is easily less than six months after that.

"(e) the draft terms of merger approved by every order referred to in sub-paragraphs (b) and (c) are the same;"

I am satisfied by the witness statement of Mr. Kashiwagi that that condition is satisfied.

"and

"(f) where appropriate, any arrangements for employee participation in the transferee company have been determined in accordance with Part 4 of these Regulations (employee participation)."

I am also satisfied on the basis of the evidence of Mr. Kashiwagi that that provision does not apply to this merger because essentially there is no works council in either of the two relevant companies.

3. I have also been referred by Mr. Thornton, who appears on this joint application for Nomura International Plc and Nomura Bank Deutschland GmbH, to a number of authorities, in particular to the judgment of Sales J in the Diamond Resorts (Europe) Limited case at [2012] EWHC 3576. At paragraph 5 of that judgment Sales J accepted a submission of Mr. Thornton (who appeared on that occasion as well) relating to the discretion which the court has under Regulation 16 as to whether to approve the merger.
4. Essentially the learned judge there accepted that the court is required to consider whether it is proper to exercise its discretion in favour of approving the merger and that this involves a process of review over and above simply satisfying itself that the various pre-merger steps had been undertaken. In particular what one is trying to do is to be satisfied that the merger does not adversely affect any stakeholder in any of the merging companies (and stakeholders can be shareholders, employees or creditors) in any material way and be satisfied that there is not any other good reason why the approval should be refused. I respectfully agree with Sales J.
5. In this case I will take each of the various stakeholders in turn. First the shareholding. In this case both Nomura International Plc and Nomura Bank Deutschland GmbH are wholly owned subsidiaries of one entity, Nomura Europe Holdings PLC. That means that the position of the stakeholders who are shareholders, or a shareholder, are not at all adversely affected by this merger.
6. Second, I will consider the position of creditors. I have been shown the relevant accounts of the two companies and had confirmation in Mr. Kashiwagi's evidence that no material change relevant to this has taken place since those accounts were drawn up. I am satisfied on the evidence that both companies are, if I can use that expression, highly solvent, that is to say they both have a very substantial net asset position and accordingly the creditors of either company will not be adversely affected by merger in any way.
7. Finally the position of the employees. On the evidence before me the terms on which the employees are employed will not change as a result of this merger. Of course, what will happen is that employees of what was a German company will become employees of a company in the UK. That seems to me to be something which, absent of any other evidence, is not an adverse effect on their interests. I am satisfied that the employees, on the basis of the material before me, will not be adversely effected by this merger.
8. Also standing back and considering whether there is any other good reason why this merger should not be approved, I am not aware of any. On the evidence I have been shown there is every good reason to approve this merger and I will do so.