Case C‑483/14

KA Finanz AG

v

Sparkassen Versicherung AG Vienna Insurance Group

(Request for a preliminary ruling from the Oberster Gerichtshof)

‛Reference for a preliminary ruling — Rome Convention — Applicable law — Cross-border merger — Directive 78/855/EEC — Directive 2005/56/EC — Merger by acquisition — Protection of creditors — Transfer of all the assets and liabilities of the company being acquired to the acquiring company’

Summary — Judgment of the Court (Third Chamber), 7 April 2016

Freedom of establishment — Companies — Directive 2005/56 — Cross-border mergers of limited liability companies — Applicable law, following a cross-border merger by acquisition, to the interpretation and performance of the obligations under a loan contract and to how those obligations are extinguished — Applicable law prior to that merger — Provisions governing the protection of the creditors of the acquired company — National legislation applicable to that company

See the text of the decision. (see paras 41-44)

It is stated in Article 1(2)(e) of the Rome convention of 19 June 1980 on the law applicable to contractual obligations and in Mario Giuliano and Paul Lagarde’s report on that convention that the convention does not apply to the merger of companies. (see paragraphs 50-52)

EU law must be interpreted as meaning, first, that the law applicable following a cross-border merger by acquisition to the interpretation of a loan contract taken out by the acquired company, such as a subordinated loan contract, to the performance of the obligations under the contract and to how those obligations are extinguished is the law which was applicable to the contract before the merger and, second, that the provisions governing the protection of the creditors of the acquired company are those of national law which were applicable to that company. In the first place, as regards the effects of a merger by acquisition within the meaning of Article 2(2)(a) of Directive 2005/56 on cross-border mergers of limited liability companies, it is stated in Article 14(2)(a) of that directive that a cross-border merger brings about, from the date when the merger takes effect, the transfer of all the assets and liabilities of the company being acquired to the acquiring company. A merger by acquisition therefore entails the acquisition by the acquiring company of the company being acquired in its entirety, without extinguishing the obligations that a winding-up would have brought about, and, without novation, has the effect of substituting the acquiring company for the company being acquired as party to all of the contracts concluded by the latter. Consequently, the law which was applicable to those contracts before the merger continues to be applicable after the merger. In the second place, as regards the protection of the interests of creditors in the case of a cross-border merger, it is apparent from recital 3 and Article 4 of Directive 2005/56 state that a company participating in a cross-border merger remains subject, as far as, inter alia, the protection of its creditors is concerned, to the provisions and formalities of the national law which would be applicable in the case of a national merger. It follows that, where a subordinated loan is taken out, the provisions governing the protection of the creditors of the acquired company, acting in their capacity as subscribers to such a loan, are those of national law which were applicable to that company before the merger. (see paragraphs 57-61, operative part 1)

Securities, other than shares, to which special rights are attached, within the meaning of Article 15 of Third Council Directive 78/855 based on Article 54(3)(g) of the Treaty concerning mergers of public limited liability companies, as amended by Directive 2009/109, refer, in addition to other securities, to debentures exchangeable for shares, debentures conferring a right of pre-emption over share capital to be issued, profit-sharing debentures and rights to be issued shares. Consequently, such securities are those which grant their holders rights which are broader than the mere reimbursement of debts and stipulated interest. The same applies, in particular, to securities acknowledging a right of their holders to exchange such securities for shares or the right to share in the profits of the issuing company. In so far as the securities issued by the company being acquired, before the merger, against the taking out of a subordinated loan do not grant their holders rights which are broader than a mere reimbursement of the debts and the stipulated interest, such securities do not, in principle, fall within the scope of Article 15 of Directive 78/855, which is a matter to be ascertained by the referring court. (see paragraphs 65-67)